How to save for a home and things to consider when purchasing

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If you don’t know how to save for a home, don’t worry. You’re not alone. Saving up the hundreds of thousands of dollars that might be needed to own your own house can be a daunting prospect after all. But with a little bit of knowledge and a lot of discipline, you can be well on your way to saving up the down payment on a house.  

How much do I need to buy a home?

Buying a home isn’t cheap, and unfortunately, knowing how much you need isn’t as simple as understanding the price of real estate. Taking out a mortgage often comes with more expenses than just the down payment alone, like 15 to 30 years of interest.  

The down payment

The down payment on a house is the cash you’ll pay upfront. While the percentage varies, most lenders require that you put down at least 3% to 20% in order to qualify for a mortgage. Bear in mind that your down payment will affect how much you borrow, as well as your interest rate, loan term, and private mortgage insurance requirements. 

If you’re not sure how much you should save, a down payment calculator can help you estimate your costs.  

Closing costs

Closing costs are the fees you pay to finalize your mortgage. Depending on your mortgage arrangement and lender, these may include the following charges:

  • Lender fees, such as loan origination costs
  • Appraisal fees
  • Title and homeowner’s insurance
  • Property taxes

Typically, the average closing cost on a house ranges from 2% to 5% of the total loan amount. 

Moving and other expenses

Unless you’re buying the brand-new house next door, chances are, you’ll run into other costs in the homebuying process. 

For instance, you may need to hire a moving team or rent a van to transfer your furniture to your new place. If you’re moving across the country, you’ll want to plan for gas, food, and hotel costs, too. 

And if the property you want requires any fixes, renovations, or upgrades, you’ll need to budget for those, too. 

5 Ways to save for a house

Knowing the cost of your dream home means nothing if you don’t know how to save for a home. Fortunately, by starting early and building good saving habits, you can claim the title of homeowner in no time at all… Okay, it might take a few years, but these tips will still help you save faster.  

Check your budget for ways to save

If you’re trying to save for a house, the first place to start is with your budget. Go through your bank and credit card statements to see how much you spend in a month. Then, look for anything you can trim or cut out, such as subscriptions, “fun” money, or gym memberships. 

You can also compare car and health insurance rates to see if you can get a better deal elsewhere. And if you have any car or student loans, you may be able to refinance for a better interest rate.  

Automate to maximize your savings

Automating your savings can help saving become a regular habit. By setting up automatic deposits on payday, you can rest easy knowing you’ve paid yourself first. Future you will thank you!  

Save raises and extra cash

Getting a raise, Christmas bonus, or particularly nice tax return is cause for celebration. But instead of blowing that money on a new pool or increasing your monthly costs, consider saving that money for a down payment on a house. 

Increase your income

Increasing your income is often easier said than done – but that doesn’t mean you can’t do it. If you’re not sure where to start, consider these steps:

  • Asking for a raise at work or raising your contracting rates
  • Starting a side hustle
  • Renting out a room or your personal stuff on sites like Fat Llama

Anything you can do to increase your monthly income gets you another dollar closer to buying a home.  

Knock out your debt

Taking on a mortgage counts as good debt since you’re building equity in your future. But many other types of debts – particularly credit card debts – only drag you down and eat into your budget. 

If you’re struggling to pay debts and save at the same time, now may be the time to knock out those ghastly monthly payments. Once you free up your income, you’ll have that much more to put toward your house fund every month.  

Knowing how to save for a home is only half the battle

Buying a home is the American Dream, but in order to make it come true, you’ll need a hefty chunk of change. And to get that, you’ll need to discipline your spending habits. If you’re ready to take this next step in your life, consider making 2022 the year of saving big.


How much do I need to buy a home?

The exact dollar amount varies based on location and the home you choose. But in general, you can expect to pay for the cost of the home (including your down payment), plus closing costs and moving expenses.

How much is a down payment on a house?

Down payment requirements vary between lenders and loan programs. For instance, veterans can buy a home at 0% down, while most homeowners put anywhere from 3-20% down.

Is it better to put a bigger deposit down on a house?

Typically, yes. A bigger down payment means that you’ll borrow less on your mortgage and may lead to lower interest rates and better loan terms.

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