Well, when it comes to buying a home, fast is relative. You’d like it now, but maybe six months from now is OK, or a year from now. If you follow these 6 principles for saving for a down payment, you’ll find the money does add up, and before you know it, you’ll be in a home of your own:

first Figure out how much you need to save in total.


It helps to have a target. For example, if you know you’ll need to save $28,000, you can work backwards to see how much money you must put away each month to reach that $28,000 goal by your end date. You’ll also feel more motivated by seeing your account march closer to the target each month.

How do you know how much you’ll need to save?

There are two amounts you’ll need to save before you can buy a home:

  • Down payment
  • Closing costs

Closing costs are typically 2% to 5% of the purchase price of the home. If the home costs $280,000, and your closing costs are 3.5%, then you need to save $9,800. 3.5% is a good average to have in mind as you start saving.

But you also need to know what price of home you can shop for.

Down payment is often the deciding factor in what people shop for. Down payment is the difference between the price of the home and the amount of your mortgage. If the home costs $280,000 and the bank will allow you to have mortgage of $240,000 (based on your finances), then you need to come up with a down payment of $40,000 (the difference between the two).

However, it’s not as straightforward as that. Suppose you agree to put 20% down on a home. If you do that, the interest rate improves, and you get rid of mortgage insurance. So if you can save $56,000 (instead of $40,000), you might be able to buy a house for $300,000 for the same amount of monthly payment.

$40,000 or $56,000? It’s a big difference. And to make things even more complex, you can buy a house with as little as 3.5% down payment in many locations (not all). So if the bank said that was OK, they’d tell you what interest rate you’d get, and you’d know how much house you could buy with that down payment.

With a 3.5% down payment, you may only be able to buy a home costing $238,000 (in this example)…but you’d be a home owner and only have to save $8,330 in down payment. Add your closing costs, and you’d need to save a total of $16,660.

So down payment amount matters. With more down payment, you can buy more house…not just because you have more money, but because you also get a better interest rate.

Talk with a lender. Find out what mortgage amount you qualify for. Then decide how much down payment you’d need to buy a home or condo in the neighborhoods you want, or would be comfortable in. Then start saving like mad!

Here are some suggestions…

Step 1: Decide when you want to buy & how much to save each month


If you need $16,000, and you want to buy in one year, then you need to save an average of $1,333/month. If you plan to buy in three years, then you need to save $444/month.

Or you can look at it in reverse. If you know you can only save $350/mo extra, then divide your downpayment amount by $350 to get the number of months needed:

$16,000 ÷ $350 = 45.7, or 3 years and 8 months.

But take heart! Keep reading…

Step 2: Look for special loan programs and locations

There are other ways to get some down payment money besides saving for it month after month. Talk to me about special home buyer programs that help with down payment assistance. There also may be low-down payment loans available for certain classes of jobs or for buying in certain locations. Get the facts before throwing your hands up!

STEP 3: CARVE OUR EXTRA savings or make more $$

On a monthly basis, can you reduce your car payment by $50/mo? Can you eliminate some subscriptions and save $60/mo? Can you cut out $100 worth of eating out each month? Put all that extra money in savings.

Also, can you find a side gig to make an extra $200/month or so? Into savings.

What about getting a raise at work? Or getting money from a relative? What about your tax refund? Into savings.

All of these are ways to speed up your savings.

It’ll be hard work and there will be sacrifices of time and luxuries. But keep your goal in mind, and remember why you’re buying this house…to create stability, to provide for your future, and to have something to call your own.

Step 4: Here’s where the rubber meets the road: Set up an automatic savings system.

Up to now, it’s all been about the planning. Now you need to make the savings really happen. Once you decide you need to save an extra $350 or $1,000/month, and you have identified where it’s going to come from, create a system to make it happen.

You can ask your workplace to withdraw more from each paycheck and perhaps they’ll even deposit money into separate savings accounts for you. If you don’t see it, it’s easier to save.

You can automatically move money into savings every pay day. Your bank will likely have a program to do this.

If you’re working an extra job, you can put all that money into a separate account.

If you’ve reduced your car payment by $100, your subscriptions by $60, and your entertainment by $80, then put $240 into savings the first of each month. You don’t want to have to think about it. Just make it routine.


Step 5. Pay off credit cards and roll the payment over.


If you have three credit cards, start paying extra payments on the one with the least left owing. Once you pay that card off, take the entire payment you were making on that first card and apply it to the card with the next lowest balance, including what you were already paying on that second card. Keep doing that until your cards are paid off. Don’t close the cards, but do pay them off. Once they’re paid off, add up all the money you were paying each month on those cards and put it into your savings each month. Don’t go buy anything more on credit for a good long while.

Step 6. Reward yourself along the way.


Create a chart, like a thermometer, with your target at one end. Then color in the money amount you save each month and watch it get closer to your target. Look for extra ways to add more to your thermometer each month. It sounds corny, but it really works to help keep you motivated!



Don’t let down payment money stop you from owning a house. Even if it can’t happen right away, that’s no reason not to plan for it down the road. And who knows…it may be able to happen right away.

Contact me to talk about special down payment assistance and low down payment loan possibilities. Either I can answer your questions, or I’ll introduce you to someone with even more specialized knowledge.

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