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Buying your first home means saving up for a down payment. Under normal conditions, you’ll need 20% of the total home cost for your down payment, but some programs will allow you to offer a lower down payment. In either case, you will need to save something for your first home, which requires a solid savings strategy.

Don’t Rely on the Bank’s Estimate of What You Can Afford

In determining how large of a loan to qualify you for, the bank will only look at certain types of debt. For instance, they may not take into account child support payments, online subscription services, or utility bill payments. Even though the bank won’t consider these expenses, they do still make an impact on your household budget. Before you begin house hunting, figure out how much of a mortgage payment you can realistically pay without struggling.

Widen Your Debt to Income Ratio

While lenders will look at your debt to income ratio in determining how much you can afford to borrow, that’s not really the primary reason to pay down your debt. For each debt you pay off, you’ll have that much more money to invest in your down payment. By using a snowball strategy, you begin paying off the smallest debts first and using that money to pay off the larger debts. This will free up more money, which you should be depositing directly into your savings account.

Stop Buying the Extras

Whenever you get a bonus, raise, or a gift of money, it may be tempting to start thinking about what you could buy with it. Instead, any extra money that comes your way should be deposited into your account so it can be used to pay your down payment. Additionally, look for extra indulgences that you can do without over the next few months. This could include buying your coffee in bulk rather than visiting the neighborhood cafe every morning. Also, round up your purchases and put the extra change into your savings account.


Once you have saved enough to cover your down payment and closing costs, you can rest a little easier. This is a big step in the home buying process because it will make it easier for you to get pre-approved for your mortgage. While saving the money may require rearranging your finances, it will be worth it in the end.