The idea of buying your first home is exciting, but it can be overwhelming, too–especially when it comes to one of the biggest hurdles: coming up with enough money for a down payment. In fact, a lack of down payment funds is one of the biggest reasons why people avoid or delay purchasing a home.  

But if diligent, there are ways to overcome the down payment hurdle and make your homeownership dream come true. And you may be surprised to learn that you don’t necessarily need to put down as much money as you think. 

Setting Your Goals 

The first step is to figure out how much money you actually need for a down payment. The amount should reflect the type of house and neighborhood you can realistically afford and how much financing you can qualify for.  

But first, let’s clear the air about a big down payment myth.  

The traditional thinking is that homebuyers need a 20% down payment in order to buy a home, but this is simply not true. If you have a decent credit score and meet other qualifications, you may qualify for an FHA loan with a 3.5% down payment. And if your credit is very good, you may qualify for a non-government loan for as little as 3% down.  

If you’re a military veteran or if you’re buying a home in a rural area, you might not need a down payment at all. There are VA and USDA loans available with no money down.  

Of course, even a 3.5% down payment can be a hefty sum, depending on where you plan to buy. So, if you need to start saving, here are some things to consider.  

Create a Plan 

There are a number of clever ways to supercharge your savings, the most powerful of which is to make savings automatic.  

First, determine how much of each paycheck you can reasonably set aside toward your down payment. Then go to your banking website and set up an automatic transfer so that money comes out of your checking account and into a separate savings account every payday. This ensures you’re consistently stashing away money for your future home. 

Next, consider placing any additional income in the same account. Got a raise? Add it to your auto transfer. Work bonus? Tax refund? Put those in there, too.  

By the way, no amount is too little to save. A growing number of banks and mobile apps allow you to round up your purchases to the nearest dollar and deposit the difference into a savings account. That extra change can add up a lot faster than you think.  

Be Practical 

While you may want to save every dollar possible, it’s important not to do so at the expense of your overall financial health.  

For example, while you save for a down payment, make sure to keep a separate rainy-day fund for life’s emergencies. And be careful to keep your credit card spending under control, because your lender will be looking at your credit during the loan approval process.  

It’s also not a good idea to put your down payment savings in the stock market or into mutual funds, where your money can lose value over the short term. Similarly, avoid tapping into your 401K or IRA, as withdrawing retirement savings early can carry significant tax implications.  

Get Help If You Can 

Still nervous about reaching your goal? Keep in mind there are numerous down payment assistance programs available that often provide some or all of the down payment funds you may need, especially for first-time homebuyers. These programs have various eligibility requirements and income restrictions, but they are well worth checking out.  

And don’t be afraid to ask your family for help. For most loan programs, homebuyers can use a gift from a family member towards their down payment. The family member just needs to provide a “gift letter” as proof the money doesn’t have to be repaid.  

Ultimately, reaching your down payment goal requires research, budgeting, and being consistent with your savings habits. Do these things, and you’ll be well on your way to owning your own home.  

If you’d like to learn more about how much money you’ll need to save for a down payment, the loan experts at Right By You Mortgage are ready to help. Give us a call at 1-877-552-2242 or drop us a note to