When buying a house, we all expect to finance the purchase with a mortgage; however, many of us are quick to overlook the 10-20% down payment required to secure the deal. Sadly, between our day-to-day expenses, and those student loans and credit card payments hanging over our heads, the idea of saving such a large sum of money may seem daunting—if not impossible.
Still, if you’re looking to buy within the next few years, getting on the right track is incredibly doable. To get started, begin by determining your ideal budget (experts suggest that your mortgage payment should be no more than 28% of your monthly income) and set a timeline accordingly.
Instead of regarding the saving process as simply setting money aside, commit to viewing it as a monthly bill that must be paid in preparation for covering the actual mortgage. If this requires you to reassess your normal budget, then pay attention to where you can trim the fat and adjust with that in mind (i.e. pack your lunch instead of eating out, brew coffee at home, move to a cheaper place if renting).
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Although some of us are great savers, putting your down payment funds into a normal checking or savings account can present problems since it may easily mix with your spending money. Instead, in order to properly track your progress, open a separate savings account that is solely dedicated to your down payment.
From there, don’t be afraid to check for government benefits and incentive programs. Since the Great Depression, the Federal Housing Administration (FHA) has attempted to aid potential home buyers with credit problems and insufficient down payment funds. While the actual application process is extremely similar to applying for a regular mortgage, FHA loans are offered through banks around the country with the main purpose of encouraging home buyers who need just a little bit of help.
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In the end, saving for your down payment is certainly not magic and, much like losing weight or completing a degree, it takes patience, perseverance, and a good bit of discipline. Like anything worth doing, a good bit of time may pass before you’re ready; however, if you can learn to view the saving process as an exercise in preparing for your future house payment, you will be better prepared to consider yourself a stable homeowner.
