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Saving for a new home has become easier by the day. Though conforming loans are now easier to access owing to reduced down payments, you still need to save not only for a down payment, but also for closing costs and other expenses that come along owning a home. Saving huge amounts may seem a huge hurdle, but an increasing number of individuals are purchasing houses with ideal down payment saving tips.

Get a savings account

  • Get a savings account

Opening a savings account with the same credit union or bank is a good idea. Having the account with the same institution has the advantage of convenience. You can transfer funds from your other accounts electronically. What this means is that you can transfer money from your checking account to your savings account without having to visit the branch.

Know how much you need to save

  • Know how much you need to save

Most mortgage lenders require up to 20% or more for a down payment. However, you can get other options where you are required to put down much less. However, this option may come with a mortgage insurance cost. This is a protection to the lender just in case you default. If a mortgage insurance is not required, be ready to meet upfront and other ongoing charges. Therefore, you need to know such information before you apply for a loan.

Here are some low-down-payment loan programs you can apply for:

FHA. The Federal Housing Administration may offer as little as 3.5% down-payment home loans. You can easily access the FHA loans and have low rates as compared to conventional lending.

GSE-backed Loans. Some government sponsored loan enterprises such as Freddie Mac and Fannie Mae are now backing 97% loan-to-value loans. This allows lenders to give up to 3% down payment home loans to eligible borrowers.

USDA. Investors and home buyers in suburban and rural areas are eligible to apply for mortgages provided by the US Department of Agriculture. These are low rate loans and 100% financing is guaranteed.

  1. VA. Veterans and active service members qualify for Veteran Loans. The best thing is that a VA loan requires no mortgage insurance or a down payment.

Set up a budget

  • Set up a budget

Every financing is properly done through a budget. Set up your budget using a spreadsheet. Include your monthly gross income on income tab then subtract all your payables, for starters, taxes, student loan payment, credit card bills, and utility bills from the pay tab. The difference gives you your net monthly income.

The next part is interesting. You need to know how much you’re left with every month. Keep track of your spending on items such as utilities, parking, gasoline, and entertainment. If possible, keep their receipts. This will help you match up your income and expenditure. A thin margin between the two implies that you should change your spending habits. Also, look for alternative saving sources.

Review interest rates

  • Review interest rates

Check interest rates on saving accounts, credit cards, car title loans among other accounts. Check every account and bill and the amount of interest imposed on each. You can do better on some of these accounts. For example, if you have been making upfront payments on your credit card, ask for a lower rate from the credit card company. Prepay your simple interest car loan for reduced interest rates.

Check your credit

  • Check your credit

Your loan limit and the rate you pay depend on your credit worthiness. Some lenders will be willing to originate a mortgage if your credit score is high even with little savings and down payment. Your credit score is calculated from your actual borrowing, total debt and other late or missed payments.

Use windfalls

Spending less to save is a good idea, but think of those occasions that bring your extra money. Think of tax refunds, bonuses, and birthdays. While it might be tempting to splurge these windfalls, this is what should be used to increase your savings without having to dip into your monthly income.

  • Use windfalls