I have recently started down the same path my fellow Newly Corporate blogger Brandon Alsup started months ago, the pursuit of the dream home. He started out with the basics of home buying and even detailed questions you should ask when buying a home. I have had similar experiences throughout the initial search and financing processes but, after analyzing my budget, purchase time frame and saving capacity, I found my biggest challenge would be saving for the down payment.

Here is the process I used for calculating how much I needed to save, and three ways I am executing towards that goal.

How much will I need to save?

I am looking at condos in a downtown area, much like many young professionals. With that in mind, I am going to use a median 2 bedroom condo prices of $200,000 for this example. You can plug your local prices in to find your personal goal. I am just going to focus on the down payment and mortgage amounts in this article rather than the rates because rates can vary so much and it get complicated fast.

The ideal scenario would be to have 20% of your down payment saved up, this way you avoid paying PMI (private mortgage insurance) because you only have 80% of the total value of your home in the mortgage.

Ideal goal: 200,000 * .20 = $40,000

That’s a pretty daunting amount for most young professionals so, many mortgage officers have found other ways to finance your loan. They do 80-15-5 or 80-10-10 financing, the first number being you first mortgage, the second being a second equity line and the third being your down payment. Remember, the more you pay in the down payment, the less interest you pay over the life of the loan because you are not borrowing as much. Here are the cost breakdowns for these two scenarios:

80-15-5: Mortgage $160,000 Second line: $30,000 Down Payment: $10,0000

80-10-10: Mortgage $160,000 Second line: $20,000 Down Payment: $20,0000

Those down payment amounts are still pretty daunting so, I spent a long afternoon running through budgeting and amortization scenarios. The outcome? I need to save faster!

My Three First Saving Steps Towards a Larger Down Payment

1. Separate Costs in Discretionary and Non-Discretionary - This way you know exactly what you can cut to save quicker, if you really want the condo, you can cut more.

2. Control the monthly costs and the little things first - I immediately analyzed the little things that add up. I adjusted my mobile phone bill (be careful not to cut too deep and cause overages!), bargained my parking fee, called my insurance company to confirm I was getting the best rate and started eating in more.

3. Start a specific savings account for your down payment and keep it growing! - A seperate account keeps you focused and growth, even if it’s just a bit at a time, keeps you motivated.

Do you have any first home/condo purchase/saving experiences? Please share your thoughts in the comments!