While making a 20% down payment is not essential to purchasing a home, saving up to make a down payment can make your repayment process a bit easier. Our biggest advice? Don’t get caught up in the numbers and the details. Saving up your money to make that down payment can be as simple as setting aside a little bit of money each month. And we have some tips on how!


First and foremost… Figure out exactly how much money you need to save. And, yes, that does mean start having a discussion about the price range you are looking within. Now, this is not a definitive number (especially since you aren’t going to be buying a house right there on the stop). But it will give you a range you can work within.

A good tip when it comes to figuring out how much “house” you can afford is to break down your income. Typically, your housing expense should not surpass 28% of your monthly income. So think of it this way- if your monthly income is $5,000, 28% is approximately $1,400.

Here comes a little math.

With mortgage rates in the general range of 4.5%, you can deduct that the mortgage you can realistically afford is around 170,000. Now, start planning on how much money you want to put down. If you are thinking 20%, that puts you in the range of a $30,000.

$30,000 may seem like a lot right now, but don’t fret! Saving can be simple, as long as you stick to a budget and stay dedicated to saving up to your ultimate goal.

The Timeline

Once you have determined how much you are saving up for, figure out the time frame in which you will be buying the home. Let’s say you are planning on buying a home in 5 years. That means you want to ideally save $6,000 each year. Not quite as daunting at $30,000, right?

Now that you know you need to save that much per year, break it down by month. You can even break it down by paycheck. $6,000 a year means $500 a month. When you think of it that way, it doesn’t seem quite as daunting or scary!

Perhaps just as important as the math is the way you budget (and save) the money. Some find putting the money in a separate account works best for them. Others prefer to create an entirely different account to budget money into. But it is important to find a method of saving that works best for you. Because of the time frame you are (typically) working within, it is recommended that you use a safe method of saving your money. Risky investments can be a beneficial when you are working with a 20 or 30 year time frame. So open up that regular ‘ol savings account and start saving.


Reevaluating your budget

Yes, this is the next on our list of tips and tricks. You have to figure out where the money is coming from, right? So, taking the time to sit down and reevaluate how you are spending your money each month will make saving up so much easier!

A really easy way to save up even faster is to immediately put all “windfalls” right into that account. That can be your tax return, a bonus, gifts, or any sizable monetary sum above and beyond your monthly income.

Now, this all sounds well and good. But life happens. Your car will need new tires, or you have a few medical expenses not covered by insurance. These things will still happen- unfortunately they will not stop just because you are starting to save for a house. But you should have an emergency fund set aside for these costs while you are saving. Having a small sum of money set aside will help cover these costs when they occur, still allow you to set aside money each month, and help you continue living your life while saving up!

All in all, it takes a bit of planning. Sit down and set aside a chunk of time to discuss (or if you are buying by yourself, to think) about what exactly you will be looking for.

And once you have everything mapped out and organized… Well, then you are ready to save!


Total Home Lending


Natasha Mason