How can I grow my savings for a down payment?

My fiance and I are beginning to save for a house. We're considering our starter home as an investment towards a house that we can live in long-term, raise a family in, etc. The problem is that in our area, housing prices are astronomical. Coming up with a down payment large enough to avoid PMI and afford the monthly payments is tough. We've saved about $30,000, and bring in a steady $112,000 combined a year with our salaries. Our target for a down payment is $200,000, but it seems like it'll take years to get there while still paying rent. Are there any ways other than the standard high-yield savings accounts and CDs that can help us grow our savings in a matter of two to five years?

Investing, Real Estate
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3 weeks ago

Normally the recommendation for funds to be used for a downpayment would be to utilize conservative investments and not risk capital.  In order to obtain the rates of return necessary for you to accomplish your goal you have to take stock market like risk. The challenge is that if the stock market goes up significantly as you need, that would generally mean that the underlying economy has done well and overall prices have increased including the price of that starter home. If you believe that your income will continue to rise and you have a promising employment future you may look to borrow money from your 401k account or utilize funds from your other retirement accounts for the first time buyers exemption on penalties. I don't like doing that personally because you are shorting your future retirement. Another consideration is to look at a townhouse or condo that may allow you to get your foot into the property ownership market so that you can continue to save money and assuming prices continue to go up your property should help you with appreciation that you could sell and use toward what you really want.  No quick or easy fix here.

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