You finally decided that it is about time to get a house. You have your dream house in mind but you don’t know how you’re going to buy it. You don’t know if you have the financial capacity to purchase a house of your own. You are suddenly overwhelmed with the things to do.

Sure, it is difficult to buy a house. But there are steps you can follow so that making that move becomes manageable in smaller steps. One of the most important part of making buying a home a rewarding endeavor is preparing your finances, which include saving for a downpayment.

To start saving for a down payment, it is important that you set a goal. You can do this better if you consult your realtor to discuss honestly and realistically your expectations and budget. Stay within your budget and determine how much cash you need for the initial payment.

Write to Start to Save for Down Payment the Right Way

Get a piece of paper and start jotting down all the incoming and outgoing cash within a month in two separate columns. It would be good to itemize all your expenses - car payment, rent, food, clothing, entertainment, gifts, etc. Do this for a couple of months to see the actual cash flow. This way, you see the expenses that you can cut down on.

You’ll be amazed at how much you will save once you actually see in paper the unnecessary things you’ve been spending on. Tightening your belt will allow you to save more cash. You should be able to allot a regular amount from your incoming cash for your down payment.

Keep Your Down Payment Savings Secure

Open a bank account, most preferably a high yield savings account, especially for your down payment. Having a fixed amount transferred to this account automatically leaves you with no choice but to save. Now you are sure that it would be harder for you to spend it for something else than when it’s somewhere too accessible.

How Much Down Payment to Save for a House

You should be able to save up to at least 20% of the amount of the house you are buying for the down payment. This is actually an amount determined by lenders because, based on surveys, home buyers are most likely to push through with the purchase if they have already put up at least 20% of the amount. Having a bigger down payment also means lower interest rates and bigger savings.

But if the mortgage is insured, you can pay a home down payment of as little as 3 to 5 percent of the purchase price. Low down payment mortgages now abound. You just have to meet all the requirements of a low down payment home loan.

[image from lisette lawrie]