How to Save for Down Payment for a House or Investment Property

The typical down payment for a home is generally 20 percent, but there are a variety of programs that can open the door to home ownership with as little as 5 percent.

Open A Savings Account

Open a savings account online or at the same bank or credit union where you now do your checking. The reason to use one institution is convenience: Most banks and credit unions allow you to transfer funds back and forth from accounts electronically and instantaneously. 

Start a Budget

The easy way to establish a budget is to use a spreadsheet — show your monthly gross income and then subtract taxes and other costs from your pay stub. This will give you your net income after taxes. Next, show what you pay for other monthly costs such as rent, student loans, car payments, and credit card bills. Subtract these costs from your net income.

In very short order you’ll be able to see how much you take in — and how much goes out. Now you can ask the magic question: Where can costs be cut?

Given that income and expenses are closely matched in many households, the only way to get ahead is to bring in more money or change your spending habits (meaning spend less) and avidly look for new savings sources.

Set a time to Review Your Spending and Savings

Set a time to review your spending and budget, say every Mondays of every week. 

• Prepare a budget and stick to it. Avoid spending on non-essential items and impulse purchases, as this type of spending delays your dream of owning your own home
• Put money towards your home deposit first. Open a separate bank account, ideally a high-earning savings account, and set-up an automatic transfer for every pay day, and make top-ups whenever possible
• Pay off your credit cards and any personal loans or hire purchase agreements. Reducing or eliminating these debts will help you increase your borrowing power
• Record and analyse your expenditure over a month to reveal opportunities for savings. Write down everything, including miscellaneous items, such as coffees, taxis, presents and meals out. ( reduce all non essentials spending)
• These everyday extras can add up over time. For instance, two takeaway coffees a day can cost up to $200 a month; money that could be put towards saving for a deposit for your first home
• Look around for deals, coupons.

 Look for cheaper ways to do things

This is how smart people save a lot of money. They make a lifestyle of finding cheaper ways to do things without diminishing their fun. Here are some great examples:

• Do you buy a lot of new books? Try the library. They have zillions of books that you can borrow for free.
• Do you go out to a lot of movies? Try renting or sticking with antenna. Some people are now even dropping their cable in favor of watching shows online. This works really well in the U.S., but it is getting better in Canada.
• Do you eat out a lot? Try eating out less or look for cheaper places to eat that you still like. You can also look for 2 for 1 coupons or buy an Entertainment Book and only eat at the places that have coupons (this will cut your eating out budget in half).
• Do you spend a lot of money on your hobbies? Try spending less or finding other hobbies that cost less—at least for a while.
• Do you buy a lot of new clothes? Try sticking with your current wardrobe for a little longer, or selectively buy clothing items that coordinate with what you already have. This will allow you to put together more outfits with fewer clothes. When you buy your clothes, look for sales.
• Do you take expensive vacations? Try something less expensive or closer to home.
• Do you buy a lot of new music? Try listening to the radio more, borrow music from the library or buy a card to monitor how much you download (and then you get what you actually want to listen to!).
• If you have a busy family, you can really save money if you eat at home more often (and this includes buying less snacks and drinks on the run), and look for fun things to do around your community that are free or don’t cost very much. If you go to the movies a lot, try renting. If you rent a lot, you could save even more by checking out the library. Many libraries have videos you can borrow for free. This option is really great for kids.

If you are able to work some of these changes into your lifestyle, you will definitely save money. However, the key to saving money is to resist the temptation to spend it on something else right away, and to start considering the cheaper alternatives.

Weekly Records of Your Money

Here is a little chart that you can use to keep track of your money

Date
Money You have	Amount	Debt	Amount
Saving Account		Viza
Cequing account		Credit Line
RRSP		Total	Total 2
Other currencies		Total General	Total 1-Total2
Investments
Cash		Equity in the house/investment
TOTAL	Total 1	Value of the house – Mortgage Principal