Saving to Buy a House: 4 Money Management Tips to Get There

Owning a home doesn't happen overnight, but you can get there with hard work.

There are three common percentage tiers for a down payment on a home. Depending on your finances, the lender, and sale price of a house, you might need 5, 10, or 20%. On a $200,000 house, that's $10,000, $20,000, and $40,000, respectively. None of the tiers results in a small down payment, but the more you can put down on a home the more house you can afford.

Besides lowering the monthly payment by reducing the total loan amount, a larger down payment can also result in approval with less-than-perfect credit in some cases.

If 5% on a $200,000 home might is too steep a hill to climb, never fear. The home ownership dream might not be lost as long as you commit to saving as much as you can, and perhaps alter your criteria on what you want in a home. Additionally, some lenders offer low down payment options for some buyers.

Regardless of which route you take to home ownership, you will need at least some money upfront. Here are 4 money management tips to start saving now.

Pay Off as Much Debt as Possible

Paying off debt frees up money that you can put toward down payment savings. It also reduces your debt-to-income ratio, which affects your creditworthiness. The less income you pay out toward debt each month, the healthier your finances.

U.S. News and World Report offers a handy debt-to-income ratio calculator that can approximate yours. If your ratio is lower than 42%, you're in relatively good shape. A higher ratio needs debt reduction. The higher the ratio, the more aggressive you should be about paying off debt.

When Debt is Paid Off, Automatically Redirect Money into Savings

It's very tempting to spend too much money after paying off a credit card or loan. After one or two months, the extra money fits into your spending habits and you can easily learn to count on it. A better choice is never spending it at all.

As soon as any debt is paid off, redirect that amount into savings. You won't miss it. If you pay off two credit cards with $100 minimum monthly payments, you can save $2,400 in a year without altering anything else in your budget. That's practically "found" money.

Jump Start Down Payment Savings

A little bit here and a little bit there adds up, but it might be easier to commit to saving if you start with at least a small chunk in your account. If you can take on a temporary part-time job, have a big yard sale, or even alter your withholdings at work to add more money to your paycheck, you'll receive some additional funds to get the down payment savings account started.

Plan purchases instead of buying on a whim, and you'll make smarter choices.

Reconsider What's Necessary, and What's Fluff

Investopedia says, "Stop keeping up with the Joneses -- They're Broke." Some things seem important, when they really couldn't be less important in the grand scheme. A bigger big-screen TV, smarter smartphone, closet full of clothes, outlandishly expensive shoes, and other trappings that give the illusion of success could actually be robbing you of it.

Some of the wealthiest people in America don't have lavish lifestyles, even though they could. The next time you think you absolutely must have some new gadget, consider whether the gadget money might serve you better as part of the down payment for a home.

Saving for a down payment takes time. Commit to at least a year of patience and discipline, preferably more, and you'll see good results.

Mint.com can help you design and implement a budget to meet your goals, both before and after buying your dream home. Sign up for a free account today and create a budget that brings all of your goals within reach.

Google+