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So you’ve decided that you’re ready to own your first home, but you’re unsure of where to begin. One of the most important aspects of working towards owning a home is getting your funds together. For many, it also happens to be the most difficult. The size of your down payment will vary depending on the price of the home you’re looking to close on. And according to Zillow, if you’re looking to sign on for a typical 30-year fixed mortgage, your down payment can range anywhere from five to twenty percent of the sale price of the home you want to purchase. But Betterment reports that it is generally best practice to pay at least 20 percent of your home’s sale price in cash at the time of closing. Of course, the thought of doing so can be extremely intimidating, but you can avoid psyching yourself out by being both practical and realistic with your approach.

Figure out what you can afford

There are plenty of awesome and free affordability calculators on the Internet that will assist you in calculating how much you can afford to spend on a home based on your monthly expenses, debt, and annual income.

Establish a budget

When you’re trying to be intentional about how much money you save, it’s best to get everything down on paper. Entering an itemized list of your monthly expenses into a spreadsheet will allow you to get a realistic snapshot of how much money you can actually afford to save month to month.

Set up automated deductions

Now that you have a solid idea of how much money you can afford to stash away each month, it’s time to put your plan in motion. One of the easiest ways to save substantial chunks of money at a time is to have a percentage of your paycheck automatically deducted and placed into a separate savings account. Parting with a lot of cash—even if it’s only temporary— can be difficult. And if the money sits in your regular checking account long enough, you’ll be tempted to start spending it while telling yourself that you’ll put it back later. Newsflash: You will rarely will you reach your goals this way.

Look for ways to reduce costs

As Trulia real estate expert Michael Corbett put it, “You’re not going to earn a down payment by stopping at Starbucks.” If you find that you’re spending quite a bit of cash on certain luxuries, it’s time to cut back. Consider bringing your own coffee from home and brown-bagging it for lunch. This will result in extra money that you can save in addition to the money being deducted from your checking account.

Bonus: Consider transferring any extra money sitting in your checking account when your next check hits to your savings account.

Work at living beneath your means (for now)

When San Fransisco resident Thomas James Slater first relocated with his wife, the couple decided that they would live beneath their means. Their ultimate goal was to own a home, so they moved into the cheapest apartment they could find, according to the Washington Post. Thomas and his wife could afford to live in an apartment that cost three times as much as the one that they were renting, but keeping their monthly expenses to a minimum will help them to reach their goal a lot faster.


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