For many, it is hard to wrap their head around the thought of a down payment for a home, especially a first time home buyer. One one side, this is a difficult task, while on the other it can be equally rewarding. So, how can you bulk up your savings and have enough for a down payment? Here are some tips and tricks:

Step One: Open a Savings Account

Opening a savings account at the same institution that you use for checking is the most convenient. Most banks and credit unions allow you to transfer funds back and forth from accounts electronically and instantaneously. This allows you to transfer money from your checking account without taking much time of your day, the beginning to making saving money easy.

Step Two: Start a Budget

The easiest way to start a budget is to use a spreadsheet. Start with your monthly gross income and then subtract taxes and other costs from your pay stub. This will give you your net income after taxes. Then, show what you pay for other monthly costs such as rent, student loans, car payments and credit card bills. Subtract these costs from your net income, also subtract other items you spend money on like, entertainment, parking or any other items. 

Doing so you will see how much you take in and how much goes out. Next question is how much can be cut out? To create significant savings, you will have to be ruthless, set a time to review your spending and budget. Go through every dime spent and see if it was justified and if not think about saving it the next month. 

Step Three: Check Interest Rates

Interest rates differ for such things as credit cards, savings accounts, car loans and other accounts. Go through each bill and account to check the interest rate. Are there areas where you could do better? Some you may be able to get lowered, for instance, some credit card companies will lower the rate for prompt payments. 

Step Four: Check Your Credit 

Your ability to borrow- and the rate you pay- are closely depending on your credit score. Lenders are generally more willing to originate a mortgage for you with a low down payment and less savings if you have strong credit. Credit score is based on the information in your credit reports, electronic files that show such things as where you have credit accounts, how much you have borrowed, your total debt, any missed or late payments, and how much more you can borrow with existing accounts. 

It is important to check your credit because about 20% of all credit reports have errors, according to the Federal Trade Commission . 5% have mistakes that can drop scores by 25 points, that's enough to move marginal borrowers into lower credit categories and force them to pay higher rates. The only solution for this is to check your report for errors and out-of-date items several months before you apply for a mortgage. 

Step Five: Use Windfalls to Your Advantage

It is always a good idea to save by spending less, but there's also another source of savings. It is the occasional events that bring extra money into the household such as birthdays, bonuses, tax refunds and of course weddings. This is all money that can be used to increase your savings account quickly without dipping into regular income. 

Mortgage programs want down payment money to come directly from borrowers to demonstrate financial responsibility and an ability to save. Because loan programs make a distinction between down payment money and other dollars, it is very important to get as much down payment cash as you can. 

There are two huge exceptions to the down-payment-only-from-you requirement. First gifts from parents, relatives and friends are generally welcome. The donor will have to sign a gift letter saying there is no expectation of repayment, interest or anything else. Second, there are many programs out there to help especially first-time home buyers. Some of these programs offer outright grants which need not be repaid, while others offer interest reductions and tax benefits. One thing to keep an eye out for while looking at these programs is to ask how long you must own the property before you can keep the profit from a sale. 

Hopefully some of these tips and tricks can help you or someone you know start saving for a down payment!