Posted By Adrianne Anderson @ Apr 1st 2022 9:00am In: Dave Ramsey ELP

This one may or may not apply to you, but often people ask where in the Baby Steps does saving up for a down payment for a home fall? Here it is!

As we work through the Baby Steps, so far you have essentially paid off your debts and saved three to six months worth of expenses, based on your situation. If you don't already own a home, right after Baby Step 3 is the perfect time to save for a down payment. This is called Baby Step 3B. You've gained so much momentum paying down your debts and saving your emergency fund, let's roll that right on into saving for a down payment. Remember, this is a SEPARATE savings account from your emergency fund. Think of your three to six months emergency fund as insurance to be there when you need it most. Your down payment fund has a specific purpose. 

If you are trying to figure out how much of a home you can afford and how much your down payment can be, call me! I am going to connect you with great lenders to help you understand your financial picture. Through Ramsey budgeting we learn that your house payment should be no more than 25% of your monthly take home pay so you don't end up house poor. Using that math, we can back into the amount of home you can afford and what your down payment should be. Ultimately, your goal should be to save up at least 10% for a down payment of the home. Ideally, save 20% so that you can avoid having to pay PMI (Private Mortgage Insurance). Also, strongly suggest going with a 15-year fixed-rate mortgage so that you can get out of debt faster and build wealth. 

There are mortgage loan options available for everyone, and you and I can explore those and what will work best for you!

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