How to save up for a down payment in just one year

When Donna Watkins remarried in 2003, she and her husband didn't have any money saved up, but knew that they wanted to buy a home.

The biggest thing they needed to accomplish this goal? A down payment.

So, right after they got married, Watkins and her husband decided to rent a one-bedroom apartment in Williamsburg, Virginia for a $1,000 a month. Their plan was to rent for one year, save up enough money for a down payment, and then try their luck at purchasing a home.

Watkins, a financial counselor with almost 20 years of experience, shares the story of how they did it…

Saving For Their First Home

To start their year of savings, the couple made one big decision: They would save up Watkin's entire income, which was in the mid $30,000s, and live only on her husband's higher salary in the mid $40,000s.

"[It was] not easy to do when you are newlyweds and have two dogs and two cats sharing your space," Watkins says.

So how did they survive off of one salary?

Bargain Shopping: Watkins says that by the time she met her husband, she had already become a 'coupon queen' and could smell a bargain from a mile away.

"I developed a real love for yard sales, auctions, and consignment shops," Watkins says. "I don't think I bought anything new for the first two years we were married."

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Creating a Dinner Budget and Plan: "We saved between $20 to $50 per week by eating at home," says Watkins, who planned dinners around whatever groceries were on sale at the market. She adds that it was a bit of a change for her husband, who enjoyed dining out often, but he eventually learned to like whatever food was on sale at the grocery store.

They also created weekly meal plans for dinner to help them with their budget. Most weeks consisted of:

• Four dinners when they cooked at home

• Two "get-out-of-cooking" nights, when they would often eat sandwiches or cereal

• One night out

"During lean times, we just eliminated the night out and created another cooking-free night," Explains Watkins. And even when they did go out to eat, they picked only affordable restaurants.

"We planned it carefully, even searching for online menus so we could estimate the cost of the meal before we went," Watkins explains. Once at the restaurant, Watkins said they "would skip the appetizer, the wine, and the dessert and just go for the entrée."

No Vacations: The Watkins also cut out any travel luxuries. Instead, they opted for "staycations," which allowed them to explore the local Williamsburg community.

"We had just moved to Williamsburg so we took some time getting to know the place, and visit several historic sites, choosing the free ones or relatively inexpensive ones," adds Watkins.

After one year, the couple saved $25,000, allowing them to put down 10 percent on a $250,000 house.

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Qualifying for the Loan

While their down payment was only 10 percent, Watkins says they had no problem qualifying for the mortgage. Why? Watkins says her husband's credit was in great shape and they had no debt.

"When we married, my husband had two or three credit cards with a few thousand dollars on each, and I refused to consider a home purchase until the cards were paid off," Watkins explains.

She adds that they were also financing a lot less than what they were qualified for.

"We qualified for something like $400,000, just on his salary, but we were financing less than half that amount," Watkins explains.

Watkins adds that the key to saving up money and getting a home is to live within your means and have a clear understand of what you can and can't afford.