How to Save Enough Money for a Down Payment on a Home
Saving up a down payment to buy your first house can seem a pretty daunting task. If you've never had more than a few thousand dollars in the bank at any given time, then setting aside five figures or more may seem impossible.
However, getting a down payment together is not as difficult as you may think -- if you go about it the right way. Let's walk through the steps to reaching that magic number.
The first step in saving up your down payment is to pin down the amount you can responsibly spend on a house. Lenders will typically limit your mortgage amount so that your monthly housing payments (including property taxes and insurance) will not exceed 28% of your pre-tax monthly income. But if your income is a bit iffy -- for example, if your pay fluctuates seasonally or you work in an industry with high turnover -- shoot for a lower percentage, perhaps 20% or so. After all, home ownership usually comes with additional expenses beyond that monthly housing payment: repairs, additional utility bills, homeowner's association fees, and so on.
Source: Fool.com
