Depending on the type of loan you are applying for, you may need from 3% to 20% of the purchase price for a down payment. In addition to your down payment, you will also need around 2%-5% of the purchase price for closing costs. Once you know how much you can afford, you will be able to determine the amount you will need and how long it will take to achieve your goal. Here are some things you can do to achieve this goal:
1. Open a bank account that is specifically for saving money for your home purchase. This can be a savings or investment account. Set it so the transfer is done automatically every month and, no matter what, do not withdraw any money from that account.
2. You may also deposit any tax refund, extra money, or gifted money into the new account.
3. Reduce any current debt. Start by paying off any high-interest credit cards.
4. Do not get into any new debt whether it is a new credit card, a loan or a new car.
5. Cut down unnecessary expenses such as entertainment, eating out, and non-essentials.
In addition to this, you may also start a new side job and save this income. However, keep in mind it is recommended that before you start saving for your new home, you have an emergency fund already in place with at least three months of your monthly expenses. This will allow you to have a separate account in case of an emergency so you do not need to tap into your home purchase savings.
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