How to Save for a Down Payment

Coming up with a down payment can feel impossible, especially if you start thinking about that lump sum the day before putting down your offer. Take these four simple steps to save early and often for your home.

No matter where you are – whether you've landed your first job or are ready to get serious about homeownership – there's no time like right now to start saving.

Whether it's for a down payment, retirement or some other large purchase, saving doesn’t need to hurt. Follow this four-point plan to put your saving wheels in motion and roll into your financial goals with a smile on your face.

1. SET YOUR GOAL.

Consider where you'd like to live, how much house you'd like to buy, what you think your income will be and who’s in the house with you. Most lenders, today, want up to 20% down on conventional loans. But you can also consider lower down payment options, including FHA, VA and USDA loans, to see if you qualify. Use our mortgage calculator to test down payment, home price and monthly payment scenarios, and then set your down payment goal.

2. VISUALIZE IT.

In visualization training, athletes create first-person mental images of exactly what they want to happen in reality. Do the same for your down payment goal. Imagine what it will feel like to buy, move into and put a healthy down payment on your dream home. Print photos of houses you love and strategically place them (hint: put one in your wallet) to remind you of what you're saving for. Future You will thank you for it.

3. MAKE EVERY LATTE BIT COUNT.

Sign up for an interest-growing savings account and make every penny count. What's a great place to start? Your latte factor.

Coined by financial expert, David Bach, your latte factor begins with an honest look at what you spend your money on every day. The money you spend on small things, like lattes, fast food and bottled water, adds up. If you invested those dollars in yourself, you'd be able to build wealth – and that down payment – without sacrificing much at all. Download David Bach’s latte factor worksheet to find your spare change.

4. AUTOMATE IT.

Let the robots help you! Automation empowers you to sock away money without even thinking about it. Use direct deposit at work to put a portion of payday directly into a savings account without laying eyes on it. You can use a financial planning service, like Ellevest, to save up for specific goals and automate your deposits there, too. And to combine a little of #3 and #4, consider an app like Acorns, which automatically rounds up purchases and invests the spare change.

Whatever method you use, make it automatic. Without thinking about it, you’ll have the down payment you need.