Thinking about buying a home in the near future? You’ll need a solid savings fund to accomplish this goal. In addition to covering such expenses as closing costs, escrow, and initial payments on taxes and insurance, cash is necessary for a down payment on a mortgage.
Planning to have 20% of a home’s purchase price to use as your down payment is a smart move. It not only makes you a more attractive borrower to a lender, but it also makes you a more reliable buyer. The more money you put down, the less likely your financing (and your home purchase!) will fall through.
A 20% down payment is a great savings goal, but it’s also a lot of cash. Let’s say you want to buy a home that costs $250,000. You’ll need $50,000 in cash to put down. That’s no small number. But you can make it happen in the near future. Here’s how you can work to build a down payment in one year, three years, or five years.