Hi everyone, I'm Laura Adams and you're listening to the Money Girl Podcast.

Saving enough for a down payment to buy a home is one of the biggest financial challenges that many of us face.

In the first episode of this two-part series, I cover how much home you can afford and the amount

you typically have to pay for a down payment.

Plus, I give several resources for federal and local down payment assistance.

So if you haven't downloaded part one, be sure to listen to episode number 299 first.

In this episode, you'll learn smart ways to build your down payment fund and the best accounts to keep it safe until you're ready to become a homeowner.

Down payment money to buy a home typically comes from savings that you build up over time.

For instance, let's say you estimate that you'll need a total of $20,000 for a down payment

plus closing costs.

You could create a goal to put aside $ 417 a month for four years,

or $833 a month over two years to accumulate the full amount.

A common question is whether you should invest down payment funds

or keep them safe in a low interest bank account.

My advice is to never invest money that you might need in less than five years.

That's because the value of your down payment fund could plummet the moment you find

the home of your dreams and leave you unable to buy it and very disappointed.

If you're not sure when you'll be able to buy a home or you know it will be within five years,

keep your down payment in a high-yield FDIC insured bank account, like a savings, money market, or certificate of deposit or

CD. If your time horizon is longer than five years, consider investing your down

payment in a low fee index mutual fund or

exchange-traded fund that offers broad market diversification. These are

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