When I asked recently for topics you’d like to see covered at Get Rich Slowly, many of you expressed interest in learning more about how to purchase a home. Jason sent the following question:

What’s the best vehicle to save money for a house? I’m probably more than a year from purchasing my first real estate. While maxing out my Roth IRA and building a nice emergency fund, I need to start saving specifically for real estate.

Besides a certificate of deposit, what’s the best way to maximize my house savings without investing in a long-term mutual fund or gambling at stocks? Is it using an online savings account? It seems like the answer should be more complicated than that.

I suspect most people save for a down payment through a simple savings account. Nowadays that doesn’t pay a lot, but it keeps the money safe. By using an online high-yield savings account, you could earn a greater return on your money while it waits to be used. In a Get Rich Slowly forum discussion about medium-term savings and investment, pf101 suggests using target-date mutual funds for goals like this.

Kris and I have purchased two houses. We didn’t save for either. We bought our first home directly from the seller. He agreed to accept a minimal down payment ($1000), and we financed the rest. Our second home took us by surprise. We hadn’t been planning to move, but when we stumbled upon our dream house, we rushed into action. We didn’t have anything specific set aside for a down payment then, either. We had to pull $5,000 out of Kris’ savings — back then I didn’t even have a savings account — to make the down payment.

What about you? How did you save for your down payment? Do you have any tips or tricks to offer Jason so that he can earn more on his money?