 TITLE: How Much Should I Save for a Down Payment? CONTENT: Coming up with the cash for a home down payment can seem difficult, especially when you're aiming for close to 20%. Here's how to get there.\n*   **Set a goal**: Start thinking far in advance about when you hope to become a homeowner, get an idea of your likely purchase price, and save accordingly. If homes in the area you're interested in sell for about $300,000, and you'd like to buy in five years, making a 20% down payment ($60,000) would mean saving $1,000 a month until then if you're starting from scratch. If that seems impossible, consider saving for longer or aiming for a smaller down payment—and calculate how much you could pay in private mortgage insurance as a result.\n*   **Cut spending**: Once you have a goal in mind, conduct an inventory of your current spending. Check whether you pay for subscription services or memberships you don't use, shop around for car insurance to see if you can get a better deal, and negotiate down your cable bill. Saving on big purchases, like opting for a used car rather than a new one, will make the biggest dent while you're working toward a down payment.\n*   **Create an ongoing budget**: After you've done an initial inventory, start tracking your spending, even if that means keeping an eye on categories, like entertainment, meals out and personal care, rather than every single purchase. Many apps will let you link your checking or credit card accounts so you can see what you're spending on. Choose a budget guideline to follow, like the 50\/30\/20 budget, which suggests spending no more than 50% of your take-home income on necessities, no more than 30% on wants, and 20% or more on savings and debt payoff. Regularly look for opportunities to cut back on wants, for instance, so you can reallocate money to savings.\n*   **Automate savings**: An automatic transfer from your checking to savings account is the easiest way to ensure you save regularly for a down payment. For many buyers, opening a high-yield savings account—offered by many online lenders—is a good option. You'll get a higher interest rate than a checking or traditional savings account would provide, but you won't take on the risk of investing your money. Investing could mean your savings lose value if the stock market dips before you plan to buy a home.\n*   **Leverage the power of gifts**: There's no shame in getting help from a relative or another source to make a down payment, and both conventional and government loans allow for gift funds.\nTo properly document gift funds, both the borrower and the donor have to sign a gift letter, provide evidence such as a bank statement showing the donor had the ability to gift the funds, produce a copy of the check from the donor, and document the deposit of the check into the borrower's account.\n*   **Shop around for a mortgage**: Consider multiple mortgage and down payment options when you're searching for a loan. Make sure you're aware of all the government-backed loan programs and state and local homebuyer assistance programs you may qualify for. If you're feeling overwhelmed by the options, a U.S. Department of Housing and Urban Development-approved housing counseling agency could be a good place to start. Local counselors can connect you with resources on the homebuying process in your area. END