13 Best Ways to Save for a House

Hoping to move out of your rental (or your parents’) but not sure how to save for a house? While pinching pennies isn’t easy, it can be done with the help of the right tools and strategies. From automating your savings to starting a side hustle, here are 13 simple ways you can begin saving for a house today.

How to Save for a House

  1. Open an online savings account

    Fortunately, you no longer have to walk into a brick-and-mortar bank to set up a savings account. Nowadays, many banks offer online savings accounts that customers can set up anywhere, anytime.In addition to being convenient, opening an online savings account may help you earn more compound interest on your deposits. While brick-and-mortar banks are still doling out low rates (think: only 0.01% APY), online savings accounts are continuing to raise their rates – making it easier for users to earn solid compounding interest on their savings deposits.Here’s a list of the best online high-yield savings accounts for May 2023 from Bankrate.

  2. Automate your savings

    When you set up a savings account, make sure to automate it on a monthly basis. This way part of your paycheck will automatically go into your savings account before you are tempted to spend it elsewhere. Trust us – this small step will make a big difference in your savings and will help curb the urge to spend your paycheck on unnecessary items.

  3. Cut back on “little” luxuries

    Believe it or not, those little luxuries add up. So now’s the time to cut back on that daily cup of Starbucks coffee and those pricey meals out. Other little luxuries that are easy to temporarily put on hold include impulse buying, cable TV, magazine subscriptions, expensive books, massages, manicures, meal delivery services, haircuts, clothes, and any other expenses that can go unnoticed.

  4. Create a budget

    Without a reasonable and realistic budget, you won’t be able to pocket enough cash for a down payment. Fortunately, creating a monthly budget is easier than it sounds. To start, we suggest first taking a good look at what comes in and out of your bank account every month. In other words: your income versus your expenses. After canceling those little luxuries (i.e. magazine subscriptions, meal delivery services, etc.), keep track of recurring, fixed expenses, such as rent payments, utilities, car payments, and other bills. Decide how much you need (and are able) to place into your savings account each month. From there, figure out how much money you have left to spend on miscellaneous expenses such as groceries and food. Once you have a realistic budget established, you should be able to start saving in no time.

  5. Save your tax return or year-end bonus

    When saving for a house, don’t spend that hefty tax return or year-end bonus on clothes or eating out. Instead, deposit it into your savings account as soon as possible. This is an easy way to instantly boost your savings and speed up your home-buying timeline.

    How to Save for a House

  6. Freeze (or end) your gym membership

    For many, a gym membership is a monthly expense they can live without (at least, for a short time!). So freeze or end your membership to avoid paying high monthly membership fees while you save for a house. Instead, go for runs outside, find free classes or utilize free workout apps.

  7. Take on additional jobs

    Save money faster by earning more cash on a monthly basis. If you already have a typical 9 to 5 job, we suggest starting that side hustle you’ve been contemplating for a while. A few examples of ways to earn extra income include freelance writing, babysitting, dog walking, freelance photography, tutoring, selling artwork, or driving an Uber/Lyft. If you decide to branch out and find a new job altogether, start brushing up on new skills and dusting off that old resume.

  8. Track your spending and expenses through Mint

    If you haven’t already, go ahead and create a Mint account. This free personal finance tool makes it easier than ever to manage your money and keep track of expenses. You’ll be able to see bills, expenses and income all in one place. By compiling your finance details together, Mint makes it easier to create and stick to a budget.

  9. Pay off credit cards to get out of debt

    While it’s important to reserve cash in order to save up for a house, it’s equally important to pay off any outstanding debt you already have. The reason? If you plan to purchase a home with credit, you’re going to need a good credit score. Without it, you’ll be hard-pressed to find banks willing to lend you money for the house. Even if you do manage to find a mortgage lender, your interest rate is sure to be sky-high. One of the best ways to improve your credit score is to pay off your debt (especially on high-interest credit cards) and continue making minimum payments as well. Read our article on why establishing good credit is an important first step to homeownership.

  10. Skip the vacation

    Traveling for a vacation can be very rewarding yet costly. According to one study, the average vacation costs $1,145 per person, or $4,580 for a family of four. Instead of heading out of town or the country, consider taking shorter, local trips, or enjoy a staycation right where you live. Save that money for your down payment and consider exploring your local museums instead, head to a nearby historical site or nature preserve, go on a hike somewhere picturesque, plan a DIY at-home spa day, or sign up for a local cooking or art class. If you feel like you need to get out of the house, maybe you can visit a friend who lives nearby and can host you for a few days. Another great little staycation option is booking a weekend stay at a local hotel. (Extra bonus if it has a pool.)

  11. Find a roommate

    Paying for rent all by yourself? Try to find a temporary roommate to split your monthly rental payment in half. Chances are, your monthly rental check is your highest, recurring expense. Living with a roommate can dramatically cut down on your costs. In addition, you’ll be able to split utility bills and general needs (think: toilet paper and paper towels) with the new roomie.

  12. Consider downsizing

    Some more ways to reduce your expenses are to move to a smaller apartment, to a more affordable area, or to sell your car (if you can swing it or have an extra one you can do without). You might enjoy a more minimalist lifestyle and, in any case, there will be a major purchase of a new house to look forward to.

  13. Rent out your spare room or parking space

    If you happen to have an extra bedroom you can spare, consider listing it on a hospitality website like Airbnb or Vrbo. You’ll have control over who rents it and when, and make some extra cash in the meanwhile. Similarly, if you have a parking space you can rent out, you can use an app like JustPark. If you live in a heavily populated area or near, say, a festival or a sporting event venue, renting out your coveted parking spot can be a great source of extra cash.

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More quick tips for how to save for a house

  • Ask for a raise
  • Instead of buying books, apply for a library card
  • Use coupons
  • Take advantage of discounts and deals at local restaurants
  • Work on improving your credit score
  • Use money-saving mobile apps
  • Have a friend or family member keep you accountable
  • Ask your family and friends to give you cash instead of physical gifts for your wedding, birthday, or holiday.

How much should you save to buy a house?

Typically, you should have enough to cover the down payment, closing costs and moving costs. The exact amount depends on the price of the house and how much you are willing to put down. Additionally, you may need to make some essential repairs right away or before you move into your new house (roof, plumbing, electric, etc.). Unless the previous owner is covering the costs, you should factor those in.

The quick breakdown goes like this:

  • The down payment. It can range anywhere from 0% to 20%, but note that homebuyers with conventional loans need to put down at least 3%-5%. The non-negotiable 20% down payment is a myth. Many lenders require less than that, depending on your credit score and income. See if you qualify for a U.S. Department of Agriculture (USDA) or Department of Veterans Affairs (VA) loan, or if there’s a first-time homebuyer incentive program in your state.
  • Closing costs. These amount to about 3%-6% of the total loan amount. So, if you take out a mortgage worth $200,000, you can expect to add closing costs of about $6,000-$12,000 to your total cost. These are separate from your down payment and are typically negotiable.
  • Moving expenses. Local moves can range from a low of $501 for a studio apartment to $2,988 and higher for a four- to five-bedroom house, depending on the size of your home and how much stuff you need to be moved. The cost for a long-distance move can range from $1,123 to more than $14,107 depending on how many miles you’re moving and the size of your move. (You can get a ballpark estimate of the cost of your move using our Moving Cost Calculator.)

How much should you save to buy a house?

How to build a better budget step by step

As we mentioned above, budgeting for buying a house is one of the first and most crucial steps in saving for a house. A simple breakdown goes like this:

  • Calculate your monthly income. This might include your take-home pay, the income of your spouse or a partner, and any income you might be making on anything else (examples include the income from renting out a property you own, royalties, and so on).
  • Calculate your current expenses. Include all your recurring necessary expenses like rent, groceries, utilities, credit card and student loan payments, car insurance payments, etc. Then figure out how much you pay monthly on non-essentials like restaurants, impulse purchases, streaming services, and so on.
  • Decide where you can cut back. Make a list of the stuff you can do without, albeit temporarily, and stick to it. It could be skipping eating out for a few months, suspending your Netflix account, or anything else that your can let go at least for a while.
  • Determine what amount you can save every month. Set a realistic amount that can go toward the down payment every month, and consider it a non-optional expense.

The bottom line

There are plenty of ways to save for a house, but you need a plan. Start by creating a budget and sticking to it. Consider the ways to cut down on expenses and increase your income. If you already know how much you need for a down payment, even better. Otherwise, just know that it can be as little as 3% or as high as 20%, depending on the type of your loan.

Frequently asked questions about how to save for a house

  • How much money should you save before getting a house?
    Factor in the down payment, the closing costs and the moving costs plus three to six months of your usual expenses as an emergency fund. If you have to incur any immediate costs of the necessary repairs in the new house, add those in, too.
  • How much should I save for a $300,000 house?
    You’ll need a down payment of $9,000, or 3%, if you’re buying using a conventional loan. If you’re using any other loan, the down payment will most likely be higher.
  • Can I buy a house if I make $25,000 a year?
    Your mortgage payment should be no more than 25% of your total monthly income, so someone making $25,000 annually could afford a $521 total monthly mortgage payment.
  • Can I save for a house in one year?
    It’s not impossible to save for a house in a short amount of time as long as you have a solid saving plan and stick to it. It depends on your income, the size of your debt, your monthly expenses, and your determination.

Ready to buy a house?

You’ve saved up for a house and are ready to make a purchase. Congrats! Once you’ve closed on the house of your dreams, start looking for movers using Moversnearyou.info’s extensive network of reputable and reliable moving companies. All movers in our network are licensed and insured, so you can rest assured that your move will be in good hands. Best of luck and happy moving!

13 Best Ways to Save for a House
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