{"id":6036,"date":"2020-07-15T12:00:02","date_gmt":"2020-07-15T19:00:02","guid":{"rendered":"https:\/\/blog.neighbor.com\/storage-blog\/?p=6036"},"modified":"2024-01-29T17:39:18","modified_gmt":"2024-01-30T00:39:18","slug":"how-to-save-for-a-house","status":"publish","type":"post","link":"https:\/\/www.neighbor.com\/storage-blog\/how-to-save-for-a-house\/","title":{"rendered":"How to Save for a House: Your Ultimate Guide to Saving Money for a Down Payment and Homeownership"},"content":{"rendered":"<!DOCTYPE html PUBLIC \"-\/\/W3C\/\/DTD HTML 4.0 Transitional\/\/EN\" \"http:\/\/www.w3.org\/TR\/REC-html40\/loose.dtd\">\n<html><body><p>Saving for a house is a major undertaking. However, home buying can lead to an increase in equity; instead of paying someone else for a place to live every month, homeowners can put that money toward value in the home. <a href=\"https:\/\/www.neighbor.com\/storage-blog\/10-most-expensive-homes-for-sale-in-utah\/\">Buying a house can be expensive<\/a>, and it doesn&rsquo;t happen overnight. Ready to start saving?<\/p>\n<p>In this guide for how to save for a house, we&rsquo;ll discuss different types of mortgage loans, cost considerations for homeownership, and how to start saving for a down payment and mortgage payments.<\/p>\n<div class=\"embed-container\"><iframe src=\"https:\/\/www.youtube.com\/embed\/\/9hGKSslX-TY\" width=\"300\" height=\"150\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/div>\n<h2 id=\"what-are-the-different-types-of-home-loans\">What Are the Different Types of Home Loans?<\/h2>\n<p>Before you create a strategy for how to save for a house, it&rsquo;s important to think about what type of loan you want. Most people genuinely do not like debt. After all, the more debt you have to pay off, the less money you have to spend on the other things that you really want each month. But a mortgage is generally considered &ldquo;good debt,&rdquo; or a low-rate loan that increases your financial stability and reach over time. In order to buy a house, most people have to take out a loan to help. Don&rsquo;t wait until you meet with mortgage lenders to consider more options besides the standard 30-year fixed mortgage. Understanding the types of loans &mdash; and what you will need for each one &mdash; can help you better determine the right type of loan for you.<\/p>\n<h3 id=\"fixed-rate-mortgage-loans\">Fixed-Rate Mortgage Loans<\/h3>\n<p>Fixed-rate loans are the most common type of mortgage loan. With a fixed-rate loan, you will need to pay the same amount each month for the lifetime of the loan, which is usually between fifteen and thirty years. A fixed-rate loan has an interest rate that does not change over the duration of the loan. You do not have to worry about changing rates and how they will impact your payments over time. This makes planning how to save for a house and the monthly mortgage payments easier.<\/p>\n<p>When choosing a fixed-rate loan, many buyers discover that the difference between a 15-year and 30-year loan is not substantial in terms of payments each month. However, choosing the 15-year option can save buyers a great deal of money over the lifetime of the loan.<\/p>\n<h3 id=\"adjustable-rate-mortgage-loans\">Adjustable-Rate Mortgage Loans<\/h3>\n<p>Adjustable-rate mortgages change based on the then-current interest rates throughout the life of the loan. Usually, you will fix your mortgage rates for a period of time &mdash; often at a lower rate than you can secure with a fixed-rate mortgage. That set period of time is around 5-10 years, depending on your mortgage and the life of your loan). After that, your mortgage rates will adjust annually to meet current market rates. If interest rates go up significantly, you can find yourself paying a great deal more on your mortgage interest. If, on the other hand, mortgage rates decrease, you can save a great deal of money on your mortgage. Adjustable-rate mortgage options can be a gamble, so they should be considered carefully.<\/p>\n<h3 id=\"fha-loans\">FHA Loans<\/h3>\n<p>FHA loans are government-backed loans from the Federal Housing Administration. One of the key benefits is a low down payment. While most mortgage loans require a substantial down payment, homebuyers can get an FHA loan with as little as 3.5% down.<\/p>\n<h3 id=\"va-loans\">VA Loans<\/h3>\n<p>VA loans help military members secure an affordable loan that meets their needs. VA loans are generally only available for service members who plan to use that home as their primary residence. Also, you must meet very specific terms regarding the type of property you can purchase with a VA loan.<\/p>\n<p>However, this option often offers lower interest rates and allows for a lower (or no) down payment. This can make it easier for current and former service members to plan how to save for a house. VA loans also do not require the buyer to take out private mortgage insurance (or PMI), which can add a considerable cost to monthly home payments.<\/p>\n<html><body><div id=\"in_post\">\n    <a href=\"https:\/\/www.neighbor.com\/host\" onclick=\"rudderanalytics.track('press editorial cta button', {location: 'first in post', version: '2.0'}, () =&gt; { console.log('track call'); });\">\r\n  <div class=\"first-in-post-cta\">\r\n    <header>\r\n      <h2 id=\"can-we-pay-you-to-store-vehicles\">Can we pay you to store vehicles?<\/h2>\r\n    <\/header>\r\n    <section>\r\n      <div class=\"service-option\">\r\n        <div class=\"service-option-icon\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"60\" height=\"60\" viewbox=\"0 0 60 60\" fill=\"none\">\r\n            <path d=\"M26.7552 20.0573C26.2911 20.9853 26.2499 22.3578 26.2499 24.375H33.7499C33.7499 22.3577 33.7088 20.9853 33.2448 20.0573C33.0557 19.6792 32.8 19.3973 32.3888 19.1841C31.9442 18.9535 31.2108 18.75 30 18.75C28.7892 18.75 28.0558 18.9535 27.6112 19.1841C27.2 19.3973 26.9442 19.6792 26.7552 20.0573Z\" fill=\"#005EB8\"><\/path>\r\n            <path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M28.0777 4.32887C29.3195 3.87732 30.6805 3.87732 31.9223 4.32887L48.7973 10.4652C51.0173 11.2725 52.5 13.3777 52.5 15.7462V33.1425C52.5 33.7407 52.4058 34.3605 52.1888 34.9629C47.861 46.9738 35.9939 53.5676 32.1164 55.464C30.7986 56.1086 29.2843 56.1505 27.9278 55.5549C23.9729 53.8185 12.0728 47.6941 7.77513 34.8948C7.58399 34.3255 7.5 33.7394 7.5 33.1762V15.7481C7.5 13.3807 8.98165 11.2729 11.2027 10.4652L28.0777 4.32887ZM22.4998 24.1662L22.4999 24.375C20.4289 24.375 18.75 26.054 18.75 28.125V35.625C18.75 37.6961 20.4289 39.375 22.5 39.375H37.5C39.5711 39.375 41.25 37.6961 41.25 35.625V28.125C41.25 26.0539 39.5711 24.375 37.5 24.375L37.5 24.166C37.5016 22.4546 37.5037 20.19 36.5989 18.3802C36.0848 17.352 35.2859 16.4621 34.115 15.855C32.9776 15.2652 31.6017 15 30 15C28.3983 15 27.0224 15.2652 25.885 15.855C24.7141 16.4621 23.9152 17.352 23.4011 18.3802C22.4961 20.1901 22.4982 22.4547 22.4998 24.1662Z\" fill=\"#005EB8\"><\/path>\r\n          <\/svg><\/div>\r\n        <h3 id=\"list-your-unused-space\">List your unused space<\/h3>\r\n        <p>People are earning $1,000s per year from their garages and outdoor space.<\/p>\r\n      <\/div>\r\n      <div class=\"service-option\">\r\n        <div class=\"service-option-icon\">\r\n          <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"60\" height=\"60\" viewbox=\"0 0 60 60\" fill=\"none\">\r\n            <path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M13.125 9.375C11.0539 9.375 9.375 11.0539 9.375 13.125V46.875C9.375 48.9461 11.0539 50.625 13.125 50.625H46.875C48.9461 50.625 50.625 48.9461 50.625 46.875V13.125C50.625 11.0539 48.9461 9.375 46.875 9.375H13.125ZM28.125 16.875C28.125 15.8395 28.9645 15 30 15C31.0355 15 31.875 15.8395 31.875 16.875V20.625H35.625C36.6605 20.625 37.5 21.4645 37.5 22.5C37.5 23.5355 36.6605 24.375 35.625 24.375H26.25C25.2145 24.375 24.375 25.2145 24.375 26.25C24.375 27.2855 25.2145 28.125 26.25 28.125H33.75C36.8566 28.125 39.375 30.6434 39.375 33.75C39.375 36.8566 36.8566 39.375 33.75 39.375H31.875V43.125C31.875 44.1605 31.0355 45 30 45C28.9645 45 28.125 44.1605 28.125 43.125V39.375H22.5C21.4645 39.375 20.625 38.5355 20.625 37.5C20.625 36.4645 21.4645 35.625 22.5 35.625H33.75C34.7855 35.625 35.625 34.7855 35.625 33.75C35.625 32.7145 34.7855 31.875 33.75 31.875H26.25C23.1434 31.875 20.625 29.3566 20.625 26.25C20.625 23.1434 23.1434 20.625 26.25 20.625H28.125V16.875Z\" fill=\"#005EB8\"><\/path>\r\n          <\/svg>\r\n        <\/div>\r\n        <h3 id=\"approve-your-renters\">Approve your renters<\/h3>\r\n        <p>You're in control. Approve who rents and the hours of access.<\/p>\r\n      <\/div>\r\n      <div class=\"service-option\">\r\n        <div class=\"service-option-icon\">\r\n          <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"60\" height=\"60\" viewbox=\"0 0 60 60\" fill=\"none\">\r\n            <path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M31.2776 51.9974L31.7666 51.5417C32.0789 51.2503 32.527 50.8317 33.0706 50.3224C34.1576 49.3041 35.6276 47.9224 37.158 46.4698C40.1682 43.6127 43.5576 40.3461 44.596 39.1282C46.7163 36.6414 48.1719 33.6468 48.8127 30.4251C49.5529 26.704 49.173 22.847 47.7211 19.3418C46.2692 15.8366 43.8105 12.8407 40.6559 10.7329C37.5015 8.62514 33.7942 7.5 30.0001 7.5C26.2061 7.5 22.4973 8.62504 19.3428 10.7329C16.1882 12.8407 13.7295 15.8366 12.2776 19.3418C10.8257 22.847 10.4458 26.704 11.186 30.4251C11.8268 33.6468 13.2824 36.6414 15.4027 39.1282C16.4411 40.3462 19.831 43.6128 22.8415 46.4698C24.3721 47.9224 25.8422 49.3042 26.9294 50.3225C27.4731 50.8318 27.9212 51.2504 28.2336 51.5418L28.723 51.9979C29.4428 52.6672 30.5579 52.6668 31.2776 51.9974ZM28.723 51.9979C28.723 51.9979 28.7232 51.998 30.0001 50.625L28.723 51.9979ZM30.0001 50.625L31.2776 51.9974C31.2776 51.9974 31.2771 51.9979 30.0001 50.625ZM30 32.8125C33.6243 32.8125 36.5625 29.8744 36.5625 26.25C36.5625 22.6256 33.6243 19.6875 30 19.6875C26.3756 19.6875 23.4375 22.6256 23.4375 26.25C23.4375 29.8744 26.3756 32.8125 30 32.8125Z\" fill=\"#005EB8\"><\/path>\r\n          <\/svg>\r\n        <\/div>\r\n        <h3 id=\"get-paid-monthly\">Get paid monthly<\/h3>\r\n        <p>Sit back and collect automatic payments each month.<\/p>\r\n      <\/div>\r\n    <\/section>\r\n    <footer>\r\n      <button>Learn more about hosting <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"24\" height=\"24\" viewbox=\"0 0 24 24\" fill=\"none\">\r\n          <path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M18.8304 5.17619L4.55227 11.6663H11.1779C11.8199 11.6663 12.3404 12.1867 12.3404 12.8288V19.4543L18.8304 5.17619ZM19.029 3.43822C20.0069 2.99374 21.0129 3.9997 20.5684 4.97757L13.0612 21.4935C12.5438 22.6316 10.8404 22.2627 10.8404 21.0124V13.1663H2.99417C1.74398 13.1663 1.37497 11.4628 2.51312 10.9455L19.029 3.43822Z\" fill=\"#EFF5F8\"><\/path>\r\n        <\/svg><\/button>\r\n    <\/footer>\r\n  <\/div>\r\n<\/a>\n  <\/div><\/body><\/html><h3 id=\"bridge-loans\">Bridge Loans<\/h3>\n<p>Bridge loans can help &ldquo;bridge&rdquo; the gap if you&rsquo;re purchasing a new home while waiting for your previous residence to sell. Bridge loans often have very high interest rates. But because they are intended to last for only a short period of time, they offer flexibility so interested buyers acquire a property without having to sell their previous residence first.<\/p>\n<h3 id=\"usda-loans\">USDA Loans<\/h3>\n<p>USDA Rural Development Loans help borrowers in rural areas throughout the United States afford homeownership. These loans are available to rural homebuyers who may struggle more financially. They often come with a 0% down offer and lower interest rates. You will have to purchase private mortgage insurance to utilize a USDA loan, and your debt-to-income ratio cannot exceed 41%.<\/p>\n<h2 id=\"determine-your-housing-budget-to-set-savings-goals\">Determine Your Housing Budget to Set Savings Goals<\/h2>\n<p>There are three key costs to consider when you&rsquo;re setting your budget and financial goals as part of your plan for how to save for a house. They are:<\/p>\n<ul>\n<li>The down payment<\/li>\n<li>The monthly mortgage<\/li>\n<li>Auxiliary costs<\/li>\n<\/ul>\n<h3 id=\"how-much-should-you-save-for-a-down-payment-on-a-house\">How Much Should You Save for a Down Payment on a House?<\/h3>\n<p>Before buying a house, you will need to save <a href=\"https:\/\/www.everydollar.com\/blog\/how-to-save-money-to-buy-a-house\" target=\"_blank\" rel=\"noopener\">between 10% and 20% of the purchase price<\/a>&nbsp;for the down payment, or the money you pay immediately outside of your mortgage loan. Exactly how much you need to save will depend on:<\/p>\n<ul>\n<li>Your credit score<\/li>\n<li>How much house you want to buy<\/li>\n<li>The type of loan you plan to take out<\/li>\n<\/ul>\n<blockquote>\n<h4 id=\"how-to-save-for-a-house-pro-tip\">How to Save for a House Pro Tip:<\/h4>\n<p>Down payments aren&rsquo;t just a requirement for many loan offers. Keep in mind that putting down at least 20% on your home loan can help you avoid private mortgage insurance. Avoiding this requirement with robust down payment savings can save you a great deal over the life of the loan.<\/p><\/blockquote>\n<h3 id=\"how-much-house-can-you-afford-calculate-your-monthly-mortgage-payment\">How Much House Can You Afford?: Calculate Your Monthly Mortgage Payment<\/h3>\n<p>Many people have lofty dreams when it comes to homeownership. They picture vast square footage, a big yard for the kids to play in, and a property that fills their every dream.<\/p>\n<p>Unfortunately, this dream may not fit the reality of your budget.<\/p>\n<p>Ideally, you do not want your mortgage costs to exceed<a href=\"https:\/\/www.daveramsey.com\/blog\/save-down-payment-while-renting\" target=\"_blank\" rel=\"noopener\"> 25% of your monthly income<\/a>. If you make $75,000 per year, that means your mortgage payment should not exceed $1,562 each month.<\/p>\n<h3 id=\"8-cost-factor-besides-the-monthly-mortgage-payment\">8 Cost Factor Besides the Monthly Mortgage Payment<\/h3>\n<p><img  decoding=\"async\"  class=\"alignnone size-full wp-image-6041 pk-lazyload\"  src=\"data:image\/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABAQMAAAAl21bKAAAAA1BMVEUAAP+KeNJXAAAAAXRSTlMAQObYZgAAAAlwSFlzAAAOxAAADsQBlSsOGwAAAApJREFUCNdjYAAAAAIAAeIhvDMAAAAASUVORK5CYII=\"  alt=\"homeowners painting and renovating their new home\"  width=\"916\"  height=\"611\"  data-pk-sizes=\"auto\"  data-ls-sizes=\"(max-width: 916px) 100vw, 916px\"  data-pk-src=\"https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/Other-Costs-of-Buying-a-New-House-Neighbor.jpg\"  data-pk-srcset=\"https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/Other-Costs-of-Buying-a-New-House-Neighbor.jpg 916w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/Other-Costs-of-Buying-a-New-House-Neighbor-300x200.jpg 300w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/Other-Costs-of-Buying-a-New-House-Neighbor-768x512.jpg 768w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/Other-Costs-of-Buying-a-New-House-Neighbor-380x253.jpg 380w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/Other-Costs-of-Buying-a-New-House-Neighbor-550x367.jpg 550w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/Other-Costs-of-Buying-a-New-House-Neighbor-800x534.jpg 800w\" ><\/p>\n<p>That does not mean, however, that you should immediately jump in and buy a house that hits the limits of your budget. When calculating how much you can afford to spend on a house, you should also consider:<\/p>\n<h4 id=\"1-closing-costs\">1. Closing Costs<\/h4>\n<p>Closing costs are the final fees at the end of a house sale when the title is transferred to you (the new buyer). Sometimes, these costs are paid for by the seller, but it&rsquo;s important to figure them into your total costs.<\/p>\n<p>How much are closing costs? Closing costs tend to be between two and five percent of the house&rsquo;s purchase price. This includes the commission for the real estate agents and broker, as well as appraisal or inspection fees. Add this figure to your calculations as you decide how to save for a house at different price points.<\/p>\n<h4 id=\"2-any-renovations-the-house-will-need\">2. Any Renovations the House Will Need<\/h4>\n<p>Can you stay in a new home without making the renovations you want? Yes, you can stay in the house and make many of those renovations over time. In fact, making renovations gradually is a great way to increase your home&rsquo;s value without stressing your budget more than necessary.<\/p>\n<p>At the same time, however, you must carefully consider whether the house will need any immediate upgrades that could stress your budget to the breaking point. How old is the roof? What about the water heater and HVAC? In a brand new house with a home warranty, you may not need to worry about those costs immediately. In an older home, however, you may need to carefully consider what modifications the home will likely need in the immediate future.<\/p>\n<h4 id=\"3-emergency-repairs\">3. Emergency Repairs<\/h4>\n<p>Even in a brand new house, you may face the need for substantial repairs. Take a look at the local area. You do not want to purchase a home in a flood-prone area, especially without flood insurance. Savvy buyers also consider other potential costs that could come from homeownership. This includes sudden purchases like a pipe bursting in winter, a broken window, or the need for a new water heater. You should have a budget for those repairs as well as an emergency fund that will help cover emergency repairs if needed.<\/p>\n<h4 id=\"4-homeowners-insurance\">4. Homeowners Insurance<\/h4>\n<p>Homeowners insurance may run significantly higher than rental insurance. Do not skimp on this vital protection for yourself and your family! Homeowners insurance can make a huge difference if you face any home emergency, from a break-in to a fire. Make sure your homeowners insurance offers all the coverage you need for your local area and that you have at least a basic understanding of your policy.<\/p>\n<h4 id=\"5-your-other-debts\">5. Your Other Debts<\/h4>\n<p>If you are relatively debt-free, a mortgage that requires 25% of your income each month can remain relatively easy to manage. If, on the other hand, you have substantial debt in other areas of your life &mdash; an expensive car payment or two; a high amount of credit card debt; continuing student loan debt &mdash; you may find it harder to manage those payments. Carefully evaluate what your <a href=\"https:\/\/www.consumerfinance.gov\/ask-cfpb\/what-is-a-debt-to-income-ratio-why-is-the-43-debt-to-income-ratio-important-en-1791\/#:~:text=To%20calculate%20your%20debt%2Dto,other%20deductions%20are%20taken%20out.\" target=\"_blank\" rel=\"noopener\">debt to income ratio<\/a> looks like and how a mortgage has the potential to impact it.<\/p>\n<h4 id=\"6-utility-payments\">6. Utility Payments<\/h4>\n<p>Moving into your own home can cause a significant increase in your monthly utility payments. If you previously lived in a rented house, the landlord might have included that amount with your mortgage. Utilities can also increase dramatically if you move into a much larger property than your last one. If you lived in an apartment, you may discover that it takes a lot more money to keep your home heated or cooled each month. Consult the home&rsquo;s seller to get an idea of what average monthly utility payments will look like and how it will impact your monthly payments.<\/p>\n<h4 id=\"7-your-other-financial-obligations\">7. Your Other Financial Obligations<\/h4>\n<p>In addition to your existing debt, there may be several financial obligations that you keep up with each month. Do you have an expensive gym membership or a hobby that requires a considerable financial commitment? You might have multiple entertainment memberships or need expensive medication each month. While you can alter some of those expenses, not all of them are negotiable. Also, you don&rsquo;t want to end up house-rich while your much-desired home prevents you from enjoying the other important things in your life.<\/p>\n<h4 id=\"8-the-stability-of-your-job-and-income\">8. The Stability of Your Job and Income<\/h4>\n<p>If you recently started a new job, you may have trouble getting a home loan. Likewise, a freelancer or self-employed individual may have variable income that proves difficult to track over time. This is especially challenging for first-time home buyers, who tend to be younger and have less established credit. If you worry about the stability of your job or fear that your income could change dramatically at any time, make sure you calculate those possibilities as you prepare to purchase a house.<\/p>\n<html><body><div id=\"2_in_post\">\n    <a href=\"https:\/\/www.neighbor.com\/host\" onclick=\"rudderanalytics.track('press editorial cta button', {location: 'second in post', version: '2.0'}, () =&gt; { console.log('track call'); });\">\r\n  <div class=\"second-in-post-cta\">\r\n    <section>\r\n      <div class=\"service-option\">\r\n        <h2 id=\"earn-1000s-per-year-with-your-unused-space\">Earn $1,000s per year with your unused space<\/h2>\r\n        <button>Become a Neighbor host<\/button>\r\n      <\/div>\r\n    <\/section>\r\n  <\/div>\r\n<\/a>\n  <\/div><\/body><\/html><h2 id=\"how-to-save-for-a-house-down-payment-and-other-costs\">How to Save for a House Down Payment (And Other Costs)<\/h2>\n<p><img  decoding=\"async\"  class=\"alignnone size-full wp-image-6042 pk-lazyload\"  src=\"data:image\/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABAQMAAAAl21bKAAAAA1BMVEUAAP+KeNJXAAAAAXRSTlMAQObYZgAAAAlwSFlzAAAOxAAADsQBlSsOGwAAAApJREFUCNdjYAAAAAIAAeIhvDMAAAAASUVORK5CYII=\"  alt=\"couple looking at financial documents as they start to save for a down payment\"  width=\"918\"  height=\"611\"  data-pk-sizes=\"auto\"  data-ls-sizes=\"(max-width: 918px) 100vw, 918px\"  data-pk-src=\"https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/How-to-Save-for-a-House-Neighbor-Steps.jpg\"  data-pk-srcset=\"https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/How-to-Save-for-a-House-Neighbor-Steps.jpg 918w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/How-to-Save-for-a-House-Neighbor-Steps-300x200.jpg 300w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/How-to-Save-for-a-House-Neighbor-Steps-768x511.jpg 768w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/How-to-Save-for-a-House-Neighbor-Steps-380x253.jpg 380w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/How-to-Save-for-a-House-Neighbor-Steps-550x366.jpg 550w, https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/How-to-Save-for-a-House-Neighbor-Steps-800x532.jpg 800w\" ><\/p>\n<p>Once you have an idea of how much you will need to save (based on the type of loan you intend to apply for and the approximate amount of house you can afford), it&rsquo;s time to start <a href=\"https:\/\/www.neighbor.com\/storage-blog\/save-money-fast\/\">saving for that down payment<\/a>. After all, knowing all the considerations for how to save for a house is just the beginning. Ready to start saving? Follow these steps:<\/p>\n<h3 id=\"1-decide-when-you-want-to-make-your-home-purchase\">1. Decide When You Want to Make Your Home Purchase<\/h3>\n<p>It&rsquo;s helpful to have a timeline in place that establishes when you want to buy your own property. First, decide if you&rsquo;re planning on buying a house in the next couple of years or if you&rsquo;re not sure you&rsquo;ve found the right town, job, and income level. Many millennials, in fact, are renting longer and putting off that major purchase. Part of that is due to personal finances, but part of it is for job flexibility.<\/p>\n<p>If you&rsquo;re going to be moving out of your current home in a set amount of time, or if you know that you&rsquo;re going to need to move at a specific point, you may need to have your down payment saved up by that time. By dividing the amount you need to save by the amount of time you have to save money, you can give yourself a solid goal to shoot for as you plan for your home purchase. For example, a 20% down payment on a $200,000 house is $40,000. If you have a year to save, aim for at least $3,300 a month.<\/p>\n<h3 id=\"2-take-a-look-at-your-current-spending\">2. Take A Look At Your Current Spending<\/h3>\n<p>If you&rsquo;re already spending up to the edges of your budget, saving for a home can prove incredibly difficult. On the other hand, by taking a close look at your existing expenses, you can often find places that you can cut your spending. You might:<\/p>\n<h4 id=\"break-down-your-actual-spending-each-month\">Break Down Your Actual Spending Each Month<\/h4>\n<p>If you&rsquo;re in the habit of pulling out your debit card or credit card) every time you want to make a purchase without pausing to determine how it will impact your budget later, that process of saving for a home is the ideal time to stop. Break down your actual spending: how much are you spending on entertainment each month? What about impulse purchases: are you spending more than intended?<\/p>\n<p>By taking a look at your actual spending each month, you may discover that there are more places where you can cut spending than you think. Often, when looking at a budget for the first time, people discover that impulse spending makes up a larger percentage of their budget than originally realized. Simply acknowledging impulse and unnecessary spending can help you cut it out or assign yourself a more realistic budget for non-direct spending.<\/p>\n<h4 id=\"take-a-look-at-your-memberships-and-subscriptions\">Take a Look at Your Memberships and Subscriptions<\/h4>\n<p>The average American subscriber has a membership to <a href=\"https:\/\/www.forbes.com\/sites\/tonifitzgerald\/2019\/03\/29\/how-many-streaming-video-services-does-the-average-person-subscribe-to\/#51f31d086301\" target=\"_blank\" rel=\"noopener\">3.4 monthly streaming services<\/a>. Each one may cost only around $10 per month, but when added together, that can equal a significant monthly expense.<\/p>\n<p>Then there are the other monthly membership and subscription expenses: your gym membership, memberships to any monthly boxes, memberships to local attractions, and more. Cutting out the subscriptions you don&rsquo;t use regularly can significantly increase your ability to save money up for a house.<\/p>\n<h4 id=\"evaluate-your-food-budget\">Evaluate Your Food Budget<\/h4>\n<p>Eating out at one meal, for one person, costs <a href=\"https:\/\/www.moneyunder30.com\/the-true-cost-of-eating-in-restaurants-and-how-to-save#:~:text=The%20average%20commercially%2Dprepared%20meal,savings%20per%20person%20per%20meal.\" target=\"_blank\" rel=\"noopener\">an average of $13<\/a>. If you&rsquo;re eating out with your spouse or kids, that amount can increase substantially. While there&rsquo;s nothing wrong with the occasional splurge, be careful. If you&rsquo;re eating out several times a month, you&rsquo;re missing out on money that could be going toward your home savings.<\/p>\n<p>Also, look out for food waste. On average, Americans waste approximately one pound of food per day. Over the course of a year, that could total as much as <a href=\"https:\/\/foodprint.org\/issues\/the-problem-of-food-waste\/\" target=\"_blank\" rel=\"noopener\">$1,800 for the average household<\/a>.<\/p>\n<p>If your food budget has crept out of control, consider how meal planning can impact your overall food budget. Often, simply planning out your buying ahead of time can reduce the amount of food that goes straight into the trash can. That can mean immense savings on your overall food budget.<\/p>\n<h3 id=\"3-consider-your-current-savings-plan\">3. Consider Your Current Savings Plan<\/h3>\n<p>Where are you currently saving money &mdash; and what is it for? If you are building up your emergency savings account,&nbsp;for example, you do not want to tap into&nbsp;that&nbsp;to buy a house, no matter how tempting it might be. On the other hand, if you already have a solid emergency savings plan in place and you have a strategy for how to save for a house, you might want to shift your savings for the time being. Consider adding that amount to your house savings instead of to your emergency or overall savings account. Even Dave Ramsay recommends <a href=\"https:\/\/www.daveramsey.com\/blog\/save-down-payment-while-renting\" target=\"_blank\" rel=\"noopener\">reconsidering your retirement contributions<\/a> when you start&nbsp;planning how to save for a house.<\/p>\n<p>Consider where you can shift your current saving efforts to make it easier to come up with that down payment for your house sooner. Remember, your home is an investment that opens the door to <a href=\"https:\/\/www.neighbor.com\/storage-blog\/guide-real-estate-investing-beginners\/\">other real estate opportunities<\/a>. The more you can put toward that down payment, the sooner you can start investing equity in your own home rather than paying rent that goes straight toward someone else&rsquo;s mortgage or retirement.<\/p>\n<h3 id=\"4-carefully-evaluate-big-expenses\">4. Carefully Evaluate Big Expenses<\/h3>\n<p>Everyday spending is often easier to cut than the big plans. Are you planning for a big vacation with your family this year? If you&rsquo;re on the verge of buying a home, you may want to skip the vacation for a year so that you can save up for your down payment sooner. Do you typically purchase the newest gaming system as soon as it comes out? Consider using your old one for a little longer and leaving that money in the savings account you&rsquo;ve set aside for your down payment instead. Carefully evaluate the luxury expenses you&rsquo;ve planned into your budget. Consider which one you really want more: the home you&rsquo;ve been planning for, or those minor additions to your life. You may find that it&rsquo;s easier to set them to the side and wait until you&rsquo;ve purchased your home than you think.<\/p>\n<p>You can also use this four-step process to start saving for closing costs, increased mortgage payments, and anticipated renovation projects.<\/p>\n<h2 id=\"how-can-a-side-hustle-help-you-save-for-your-down-payment\">How Can a Side Hustle Help You Save for Your Down Payment?<\/h2>\n<p>Knowing how to save for a house may not be enough. Many people find that their budget is tight enough while paying rent that saving up for a down payment seems like an impossible proposition. One great solution? Try a side hustle. Increasing income can work just as well as decreasing spending. Many side hustles can help you generate additional income that will make that savings account grow faster and put you in a better position to achieve your goals. Some ideas include:<\/p>\n<h3 id=\"bringing-in-freelance-work\">Bringing in Freelance Work<\/h3>\n<p>If you work in a highly sought-after industry, you may be able to do some freelancing to generate additional income. But make sure you check your contract! Some employers will not allow you to work on the side. Others will allow you to have other clients as you like, as long as it doesn&rsquo;t take place during business hours.<\/p>\n<h3 id=\"adapt-your-hobby-into-a-side-hustle\">Adapt Your Hobby Into a Side Hustle<\/h3>\n<p>Do you have a hobby that people are always interested in? Whether you enjoy painting, crocheting or knitting, sewing, or woodworking, there are plenty of great ways for you to use your hobbies to generate a great source of side income. Try not to buy an excessive inventory of materials until you have an idea of how successful your hobby will be and how much income you can generate from those pieces.<\/p>\n<h3 id=\"try-dog-walking-yardwork-or-another-much-needed-service\">Try Dog Walking, Yardwork, or Another Much-Needed Service<\/h3>\n<p>Many people today simply don&rsquo;t have time to take care of everything on their own. You can provide a valuable service that will allow you to save some extra money at the same time. Try:<\/p>\n<ul>\n<li>Dog walking<\/li>\n<li>Babysitting<\/li>\n<li>Yardwork<\/li>\n<li>Painting<\/li>\n<li>Working as a handyman<\/li>\n<li>Handling car maintenance<\/li>\n<\/ul>\n<h3 id=\"share-your-expertise\">Share Your Expertise<\/h3>\n<p>Do you have industry expertise that you can share with someone outside your industry? Consider creating high-quality blogs or other types of content. This side hustle is particularly useful because it requires relatively few tools to get started, but will still allow you to see a considerable return on your investment.<\/p>\n<h3 id=\"utilize-what-you-have\">Utilize What You Have<\/h3>\n<p>Did you know that you can share the <a href=\"https:\/\/www.neighbor.com\/storage-blog\/how-to-pay-off-a-mortgage-faster\/\">extra storage space<\/a> you have in your home with your neighbors for a fee? Have you considered selling items in your home that <a href=\"https:\/\/www.neighbor.com\/storage-blog\/study-quarantine-americans-stuff\/\">you no longer want<\/a>? You&rsquo;re going to move anyway, so getting rid of those items now can significantly decrease the burden of moving while simultaneously helping you earn a little extra money.<\/p>\n<p>Figuring out how to save for a house and saving money for a down payment sounds like huge tasks, but&nbsp;they&rsquo;re not impossible! With these strategies and tips, you can have your down payment in hand before you know it. You&rsquo;ll be able to bring in extra income by renting out the extra storage space in your new house or using your new home office to full advantage.<\/p>\n<\/body><\/html>\n","protected":false},"excerpt":{"rendered":"Saving for a house is a major undertaking. However, home buying can lead to an increase in equity;&hellip;\n","protected":false},"author":25,"featured_media":6040,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"csco_singular_sidebar":"","csco_page_header_type":"","csco_appearance_grid":"","csco_page_load_nextpost":"","csco_post_video_location":[],"csco_post_video_location_hash":"","csco_post_video_url":"","csco_post_video_bg_start_time":0,"csco_post_video_bg_end_time":0,"footnotes":""},"categories":[188],"tags":[95,58,55,30,53,41],"class_list":["post-6036","post","type-post","status-publish","format-standard","has-post-thumbnail","category-home-buying","tag-buying-a-house","tag-finances","tag-home-advice","tag-how-to-guide","tag-lifestyle-tips","tag-saving-tips","cs-entry","cs-video-wrap"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How to Save for a House: Your Ultimate Guide to Saving Money for a Down Payment and Homeownership - Neighbor Blog<\/title>\n<meta name=\"description\" content=\"Figuring out how to save for a house is easier if you have a plan. Read our guide to learn more about the costs of buying a house and how to save for them.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.neighbor.com\/storage-blog\/how-to-save-for-a-house\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Save for a House: Your Ultimate Guide to Saving Money for a Down Payment and Homeownership - Neighbor Blog\" \/>\n<meta property=\"og:description\" content=\"Figuring out how to save for a house is easier if you have a plan. Read our guide to learn more about the costs of buying a house and how to save for them.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.neighbor.com\/storage-blog\/how-to-save-for-a-house\/\" \/>\n<meta property=\"og:site_name\" content=\"Neighbor Blog\" \/>\n<meta property=\"article:published_time\" content=\"2020-07-15T19:00:02+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-01-30T00:39:18+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.neighbor.com\/storage-blog\/wp-content\/uploads\/2020\/07\/How-to-Save-for-a-House-Neighbor.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"921\" \/>\n\t<meta property=\"og:image:height\" content=\"609\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Casey Schow\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Casey Schow\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"17 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.neighbor.com\/storage-blog\/how-to-save-for-a-house\/\",\"url\":\"https:\/\/www.neighbor.com\/storage-blog\/how-to-save-for-a-house\/\",\"name\":\"How to Save for a House: Your Ultimate Guide to Saving Money for a Down Payment and Homeownership - Neighbor Blog\",\"isPartOf\":{\"@id\":\"https:\/\/www.neighbor.com\/storage-blog\/#website\"},\"datePublished\":\"2020-07-15T19:00:02+00:00\",\"dateModified\":\"2024-01-30T00:39:18+00:00\",\"author\":{\"@id\":\"https:\/\/www.neighbor.com\/storage-blog\/#\/schema\/person\/ef46f0328b3b37ab68cf55f85c8fb21b\"},\"description\":\"Figuring out how to save for a house is easier if you have a plan. 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