Everyone knows you need a down payment if you want to buy a house (well, let’s say almost everyone).  However, with rent, car payments, student loans and all the other financial commitments you have, how do you get that down payment together?

First, I want to clear up one misconception.  You do not…I repeat…you DO NOT have to have at least 20% of the sale price as your down payment.  That is simply no longer true.  Most of my first-time home buyers are putting down 3-5% with the occasional “saver” who has 10% down. 

Of course the more you put down, the better off you are but that large of a down payment can be daunting and feel impossible to reach. It’s just not necessary anymore. Now that you know that, you can determine your budget and how much you need to save.

Here are some easy and relatively painless ways to save up the money you need so you can make your “American Dream” come true.

Auto-transfer or deposit – This is such any easy way to start saving money.  Set your bank account to auto-transfer a certain amount of money at regular intervals (maybe monthly) into your savings account.  Or, if you have direct deposit, direct a percentage of every paycheck to go into your savings account.  It takes no effort on your part and you won’t even know the money is gone.

Save those windfalls – When you find yourself with extra money, whether it’s a   bonus from work, a tax refund or a $20 bill you found in the pocket of your jeans, take it straight to the bank and don’t look back.  This is money that you didn’t know you had so you won’t miss it if you save it right away and it’ll get you to home ownership that much sooner.

Try crowdfunding – We’ve all heard about Kickstarter and GoFundMe and know how they work. Why not do something similar to fund your dream home? Whenever you have a gift-giving occasion like a birthday, holiday or anniversary ask your family and friends to add to your down payment via sites like Feather the Nest in lieu of gifts.

Ask about down payment assistance – There are a number of down payment assistance programs out there for first-time home buyers.  Some are government funded.  For example, Ohio has the Ohio Housing Finance Agency (OHFA) and you can check out their home buyer programs at www.myohiohome.org.  Some banks also offer their own down payment assistance programs as well.  Your lender will be able to tell you what you might qualify for.

Use retirement savings – I know…but this isn’t for retirement, you say.  However, purchasing and owning property is an investment for your future.  That’s why you can take up to $10,000 out of your IRA for a first-time home purchase without paying the early withdrawal penalty (keep in mind, you’ll still have to pay income tax on that withdrawal at the end of the year).  If you have a 401K, you can borrow from it and pay yourself back with interest.  There are some drawbacks to these options so make sure you consult with an accountant or financial planner before going this route.

There are plenty of other smart and creative ways to start saving for a down payment. If you have some, please share with us in the comments. However, these five are a great start.  If you do even one or two of these, you’ll find yourself on the path to home ownership in no time.