Creative Ways to Save for a Down Payment in LA

After renting for years in Los Angeles, many residents approach a point when they want to purchase a starter home in LA, but saving for a down payment can feel like a monumental task. 

Closing a deal on a home is usually the most expensive transaction a person can make, and the sum needed for a down payment can bust the bank for a homebuyer starting out. While some buyers can fund an all-cash buy in the City of Angels, most buyers have to take out a mortgage. Plus, considering the historically-low interest rates in the market, it may make more sense to do so. 

Organizing the capital needed for a down payment on a home in Los Angeles is no easy task, and buyers must creatively think of ways to save money. While there is no catch-all solution, the below we’ve compiled the leading methods buyers use to save up faster for their down payments. 

Save with goals & automated deposits

Money comes and money goes in Los Angeles, as food, fun, and rent are huge expenditures that eat into your monthly budget and can hamper efforts to save up for a down payment. Buyers need to figure out their monthly costs, then set up automatic deposits into their savings account based on their basic needs. 

This way, buyers will not feel tempted to spend money earmarked for savings, and once a paycheck comes in, the money automatically going into a high-yield savings account will subtly grow over time. 

So while a buyer can instantly put away critical savings for a down payment, they should adopt the same practice for other inflows of cash. For instance, instead of using a tax refund for a vacation to Hawaii, use a portion of your refund for a staycation in a South Bay city, then save the rest for the down payment. Buyers in Los Angeles should 

One way to have fun saving is setting up savings goals; once you reach a quarter of the savings needed for a down payment, treat yourself with a meaningful purchase that will enrich your life in your new home and keep you dedicated to the savings journey. 

Constructively downsize discretionary spending 

Living in Los Angeles is an expensive endeavor as rent does not come cheap, nor do the necessities of life when you’re living in California. But thriftiness is paramount when it comes to saving up for a down payment, and there are ways Californians can cut costs to save beyond ditching cable for streaming services. 

First, buyers can tally their monthly income and expenditures through banking apps, which organize monthly spending habits for users. After breaking down the monthly budget, LA residents can shave monthly car insurance costs by readjusting their commute to work. Most Californians own a car, but if there is a way to make use of the public transportation in Los Angeles or biking, buyers can downsize usage and work with insurance brokers to cut monthly premiums as a result. 

While building a stash of credit card points can help pay for a vacation, when saving for a down payment, LA buyers are better suited to using cash or debit instead of credit to pay for purchases. This way, buyers aspiring towards owning a Santa Monica home can save themselves from paying interest fees or risk overspending and carrying balances. 

While it sounds cliche, putting in the effort to make a pot of coffee at home or cutting out take-out lunches and dinners does make a difference. Those savings will quickly become apparent. Of course, cutting costs applies to groceries too, and buyers can get creative with their grocery list by purchasing groceries in bulk, choosing store-brand options, and making use of sales and coupons when available. 

Downsizing does not mean putting an end to all fun activities. Aspiring homeowners can use this opportunity to clean out their life and sell their unused clothes on websites like Poshmark and eBay. 

Leverage a side hustle

There are boundless side hustle opportunities in Los Angeles, and they are limited only by the time a buyer has available to them. Even something as simple as a garage sale can generate a sizable chunk of money for buyers. But if a buyer hosts a garage sale and finds they have an eye for antique furniture and other items, platforms like Etsy are a great way to sell the treasures you find. 

Thrifty buyers can go to other garage sales and turn one person’s junk into treasure by creating an online antiquing business or take the old copper and bronze fixtures to a scrap yard to earn a sizable sum. Additionally, if you are artistically-inclined, there are plenty of outlets where you can monetize hobbies like sewing, knitting, and crafting to make a respectable side business. 

If you are inclined to work from home instead of with your hands, LA residents working in communications or marketing can add a side hustle to their off time. Buyers working remotely can get creative and find opportunities to work as a freelance writer or even a virtual assistant for technology, industrial, or entertainment executives. 

There is good money to be made from copywriting, drafting emails, and savvy turns can create a sizable business out of managing digital tasks. LA residents can kickstart their photography careers by selling their photos to Shutterstock or iStockPhoto, with each download earning money for fledgling photogs. 

Fans of driving that love the open road can mask up and pick up side work as an Uber, Lyft, or DoorDash driver. The extra money in your pocket is great, and it provides entrepreneurial buyers with an opportunity to explore Los Angeles neighborhoods they may have otherwise seen. While there are many ways Californians can proactively make money, there are ways buyers can passively save income. 

Get help with a gift

Sometimes, all we need is a little help from our friends and family when saving up for the final stretch of the down payment. Many first-time buyers in America rely on family to help organize the saving effort, and lucky buyers can receive gift funds to help finance the down payment. 

Mortgage providers usually allow homebuyers in Los Angeles to use gift funds from relatives or others to cover some or all of a down payment. While it may seem unsettling to ask for help, it takes a village to take those first steps on the property ownership ladder. 

Saving up for a home is a monumental life event to be proud of, so if there is a beloved uncle or aunt you can rely on, have a heart to heart and explain why their help can get you over the last final miles of saving. 

Before you accept such a gift, speak to your mortgage broker and real estate agent to ensure you document it appropriately.

Work with brokers offering a rebate

Thanks to consumer-friendly real estate laws, real estate brokerage firms are able to pass a portion of their fees back to the buyer in the form of a commission rebate when they close a deal on the LA home of their dreams. These commission rebates can help increase your buying power or simply replenish your savings after shelling out your down payment.

For example, Prevu offers Los Angeles home buyers the largest commission rebate in California. The company’s Smart Buyer Rebate empowers homebuyers with savings of up to 1% of their purchase price. With the high price points for LA homes, that rebate can add up to huge savings very quickly.

Interested in buying a home in LA? Browse listings in your favorite neighborhood and see how much you can save with Prevu’s Smart Buyer Rebate.

Prevu Real Estate, Inc. is a licensed real estate broker in California, license number 02134758.