Unless you plan on using a VA or USDA loan, you’ll have to put down at least 3% to secure a mortgage for your first home. Considering the median price for a home in Hawaii is more than $500,000, that means you’ll have to save at least $15,000 to buy a modest residence on one of the islands. Thankfully, putting aside such funds is relatively straightforward with these simple tips. 

3 Steps to Saving for a Down Payment 

1. Pay off High-Interest Debt

It’s wise to pay off any expensive debts you’ve accumulated before buying a home, including credit card accounts, personal loans, and auto loans. While it’s ideal to pay off student loans before taking on a mortgage as well, your timeline may not necessarily line up. But as long as the payments are manageable and your income is high enough, student loans shouldn’t inhibit you from qualifying. Once your high-interest debts have been paid off, put those payments into a savings account instead. 

2. Devise a Reasonable Goal 

Determine how much should you save for a down payment to provide a concrete goal to work toward. If you want to avoid private mortgage insurance, you’ll have to put down at least 20%. Additionally, lenders don’t want you to spend more than 28% of your gross income on your mortgage. By using these two figures, you can determine how much you should save based on the amount of the loan you’ll likely qualify for. 

3. Determine Your Timeframe 

Although life can be unpredictable, it’s wise to devise a deadline for your savings goals, which will help you stay on track and make saving for a down payment easier by breaking it up into dozens of small deposits. If you want to buy in five years, for example, you have 60 months to save up. If you decided you’ll need $100,000, that means putting aside just over $1,600 a month. 

When you’re ready to apply for a mortgage, turn to Hawaiian Financial Federal Credit Union for a stress-free loan application.  With hundreds of millions of dollars in assets and over 60,000 members across Hawaii, Hawaiian Financial FCU is one of the leading financial institutions in the state, with a reputation for combining personalized service with technologically advanced personal banking solutions. Learn more about our broad array of services, follow us on Facebook, Twitter, and Instagram for news and updates, or call (808) 832-3700 on Oahu or toll-free at (800) 272-5255 with any questions.