From an investment perspective, being a homeowner over the past couple of years has been no picnic. Yet many people still want to have their own home —and it's hard to argue with that impulse. They want to put down roots and become part of a community, even if housing prices haven't experienced the kind of ascent that characterized the first five years of the new century. Some people may also believe the market is beneficial for buyers; it's certainly better than it was in 2005, but it's hard to predict where real estate prices are headed.

No matter what your motivation, getting your foot in the door — the door of your new home — can be difficult. Most down payments are 20 percent of the purchase price, and 20 percent in many parts of the country is still a substantial figure. How do you amass that kind of money? Yes, you can sometimes buy with a smaller down payment, but you may be overextending yourself; your mortgage will probably be more expensive.

The obvious answer is saving. There's no shortcut, no clever move that will help you find 20 percent of the cost for your dream home. But you can save intelligently.

SET YOUR PRIORITIES

Your goal could be buying a house, but before you take the leap, make sure you've got all the bases of your financial future covered:

— Retirement savings: Start putting aside for retirement. I hope you're already on track to building the kind of wealth you'll ultimately need. At the very least, if your employer provides a match, contribute enough to capture that amount.

— Pay off your credit card debt: Your next priority should be to eliminate high-interest consumer debt. Credit card debt interest rates are typically double-digit, which can quickly erode your financial health. Make sure you get rid of credit card debt before you take on the additional load of a mortgage.

— Build an emergency fund: You need some money in the bank to cover yourself in an emergency. A good amount is three to six months of essential living expenses, in case you can't work or lose your job.

— Max out your 401(k) or other retirement vehicles: Since retirement is likely your most important financial goal, it should probably take precedence over purchasing a home. Even before you think of saving for a down payment, make sure you're setting aside the maximum in your tax-advantaged retirement account(s).

— Save for your children's future: If you have children, saving for college can be a major challenge. For many of us, this means starting as soon as possible — even before you start putting money away for a home.

KNOW WHAT YOU'RE GOING TO NEED

That's a lot of preliminary steps to prepare your financial house, before you even start saving for your actual house. But each of them is important; there's a clear rationale behind them. Assuming you're working on your other financial responsibilities, it's now time to save for your home.

While you're building up the funds for the down payment, check your credit rating. Make sure there are no mistakes that might cost you dearly when you apply for a mortgage (or prevent you from receiving one entirely). Higher scores are better; lower scores generally translate into higher mortgage interest rates, driving up the ultimate cost of buying your home. You can take steps to improve your score: pay your bills on time, never miss payments and reduce your indebtedness. You can learn more about credit scores and methods to improve them at myfico.com.

Second, figure out how much mortgage debt you can afford. A good guideline is the "28/36" rule: Housing-related costs — mortgage payments, property tax and insurance — should not exceed 28 percent of your pretax income; total debt payments — auto loans, credit card debt and housing expenses — should not total more than 36 percent of your pretax income. It's vital to make sure you can afford the monthly mortgage payments, including insurance and taxes. It would be a disaster to find you can't really afford your home.

If you went through foreclosure, you'd probably sacrifice your down payment plus any equity in your home — your credit rating could be ruined. By the way, be wary of adjustable rate mortgages, even if the initial rate is very attractive. If you decide to go that route, make sure you understand the terms and create some projections to see how rising rates could affect your monthly payment. Many home buyers took out mortgages with very low "teaser" rates only to find they couldn't afford their monthly payments just a few years down the road.

Now you can make an informed decision about how much you can afford. In addition to the down payment, you'll want to allow for other expenses: transfer taxes, property taxes, homeowner's insurance and moving costs. It seems that everybody I know who has bought a house has found some expensive repair that needs fixing right off the bat. Therefore, the down payment is only a part of the cost required to get you in your new home.

The bottom line: A home is most likely the biggest purchase you're make, but don't neglect your other major financial obligations — retirement, consumer indebtedness, an emergency fund and saving for college. After addressing all these issues, you can focus on the goal of saving for a house. There's no magic bullet for this: you just have to save. I would recommend opening a separate account (a money market or online banking account) exclusively for your house money. Keeping it physically separate will make it less tempting to spend, and seeing it grow will give you a sense of progress.

Finally, remind yourself that there's no rush in this kind of market. You might find even better deals in the housing market one, two or even three years down the road. So keep saving and continue looking until you can comfortably purchase your dream house.

Carrie Schwab Pomerantz is Chief Strategist, Consumer Education, Charles Schwab & Co., Inc., Member SIPC. You can e-mail Carrie at askcarrie@schwab.com. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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