Saving money to buy a home is no easy task. Not only do buyers have to think about the down payment, but they also have to make sure they have funds set aside for things like closing costs, a home inspection, necessary repairs, moving expenses and more.

While it may seem daunting, those who dream about owning their own home someday should rest assured that saving up enough money is very doable. It takes immense discipline and some extensive strategic planning, but if you're serious about achieving the American Dream of homeownership, there's a lot you can be doing to make sure you get there. 

1. Don't wait to start saving 

There is no time like the present to start working toward your goals. Depending on your income and monthly expenses, it can take a while to save up for the down payment and other costs of buying a home. Every dollar and cent you set aside will make a difference.

All of those small amounts can really build up over time, so even if you are only in a position to save a tiny bit per month, do it. The earlier you start, the earlier your dream will come true and the better financial position you will be in when it comes time to make an offer. 

2. Create a budget 

The best way to save is to create a plausible monthly budget that allows you to put a certain amount of money in your savings account every month.

The Simple Dollar suggested using a spreadsheet to figure out your fixed and variable monthly expenses. To determine how much you can save each month, first subtract fixed costs like taxes, rent and loan payments from your monthly income. Next, track how you use the rest of your money by diligently saving receipts for things like gas, leisure activities and utilities. Finally, figure out where you can be spending less money and how much you can viably put into your savings account every month. Remember, it is possible to cut costs. It may involve dining out less, walking more and making other sacrifices, but there are always ways to save.  

One great way to make sure you don't spend the money you want to save is to have a percentage of your paycheck automatically be placed into your savings account through direct deposit each month. 

NerdWallet provided a list of creative savings suggestions, including:

  • Use an app like Dollarbird or Mint to help you keep track of your savings 
  • Rather than splurging, save bonuses, tax refunds, raises and other extra sums of money you obtain
  • Anytime you are given back a five dollar bill in change, add it to your savings
  • Sign up for a cash rewards credit card and save any cash back you receive
  • Hang pictures of the home you want where you currently live and work so you are constantly reminding yourself what you're working toward 

3. Move to a cheaper apartment 

A great way to save money is to move to a cheaper apartment. As USA Today put it, you should "downsize before you upsize." The less rent you pay, the more cash you will be able to set aside each month for your future home. While living in a smaller place right now might not seem ideal, it will help you reach your savings goal a lot faster. Think about that big house you're working toward and remember that the bargain apartment is only temporary and helping you get where you want to be. 


Enlist your family and friends for help 

It's going to be very difficult to accomplish your savings goals if your friends and family are constantly inviting you out to join them in costly activities. It is hard to turn down exciting invitations, so make sure your loved ones know what you are trying to do and ask them to support you by minimizing the temptations.

5. Figure out what kind of down payment you want 

While a 20 percent down payment is standard, there are now certain programs that allow buyers to purchase a home with as little as a 3 percent down payment. Of course, down payments lower than 20 percent are often accompanied by mortgage insurance requirements and higher interest rates. Still, make sure you research all the different loan programs out there to determine which you want to shoot for. That way, you can set a specific goal of how much money you need to save. 

6. Look into gifts from loved ones 

Buyers are allowed to use gifts from friends and family to finance their down payment. If you have a very generous loved one willing to give you the cash, that is perfectly acceptable as long as that person is willing to sign a letter saying he or she does not expect that money to be paid back. 

7. Look into financial assistance programs 

According to The Simple Dollar, there are about 2,300 programs in the U.S. that exist to provide financial assistance to home buyers. Do some research to see if you are eligible for these programs and to find out what kinds of benefits they offer - just make sure to find out if a program has any disadvantages that could affect you as well. 

6. Be very careful about drawing from your 401(k) 

While it is certainly an option to use some of the money from your retirement savings to finance your down payment, many experts strongly caution against it. Zev Fried, a senior financial planner at JSF Financial LLC in Los Angeles, told U.S. News and World Report that buyers should really avoid this option.

"From a planning perspective, pulling from a retirement account for a down payment is often the worst option," Fried said. "A retirement account is for retirement, and should only be tapped for dire emergencies, as there are usually penalties and taxes when one withdraws money from these accounts." 

In the end, saving for a down payment is really about responsible budgeting. It may require a few lifestyle changes, but it will all be worth it when you are handed the keys to your new home.