10 Tips To Save for a House in 2025

Purchasing a home is exciting, but it’s still a major financial commitment that should be taken seriously. As you go about your homebuying journey, it’s important to know how to save for a house and to have a financial plan to keep you on track with your savings goals. Not only can this ensure you get an affordable mortgage, but it can also keep you from taking on debt that you later regret.

Here’s how much money you should ideally save when buying a property, how to save up for a house, and other cost considerations.

How much to save before you buy a house

Before asking yourself, “How do I save for a house?” it’s important to determine how much money you should set aside for your purchase. After all, the last thing you need is to end up with a mortgage you can’t afford.

The average sales price of a home in the United States is $495,100 — significantly higher than it was during pre-pandemic times. If you plan on getting a mortgage, you’ll typically need to save up for a down payment and closing costs. You may also need money for moving expenses, a home inspection, an appraisal, and other fees related to your purchase.

While there’s no one-size-fits-all answer to how much you should save, here are a few other factors that can affect how much you set aside:

• Your timeline and ability to save: The average person saves 3.4% of their disposable income a year. Determine how much money you can realistically save, and how long you have to do it.
• Your financial situation: Review your current income, expenses (including debts), and assets to determine how much house you can afford. If your current debts are high, you may need to pay those down before worrying about how to save for a home.
• Home sales price: The more expensive the home, the more you’ll need to save for a down payment and other fees, like closing costs. If you have a smaller down payment, you could end up with a higher monthly mortgage payment or a larger loan than you’re comfortable with.

The costs of buying a house

Buying a house comes with several upfront and ongoing costs, which can cut into your budget if unprepared. Here are some of the biggest ones:

• Down payment: A down payment is money you pay upfront to secure financing for your home. Down payment requirements vary by lender and loan type. USDA and VA loans, for example, usually don’t require a down payment. To get an FHA loan, you’ll need a minimum down payment of 3.5%. The average first-time homebuyer has a down payment of 6% to 7% of the home purchase price.
• Closing costs: Closing costs are another upfront expense that is usually between 3% and 4% of the home purchase price. In 2021, the average closing cost for a single-family home was $6,905.
• Moving expenses: The cost of moving depends on factors like the moving distance, whether you hire professional movers, and how much you’re bringing with you.
• New furniture: If you plan to buy new furniture, add this to the overall homebuying cost.
• Repairs: Depending on the home’s current condition, you might need to take care of certain repairs, upgrades, or maintenance tasks.
• Private mortgage insurance (PMI): If you get a conventional loan with less than 20% down, you’ll usually need to get PMI. This could be an upfront expense, a monthly expense, or both.
• HOA dues: Depending on the property’s location, you could be responsible for homeowners association fees in addition to your monthly mortgage payment.
• Other common fees: Buying a house comes with other fees as well, including property taxes, homeowner’s insurance, government taxes, appraisal fees, tax service provider fees, and loan application or underwriting fees. While you don’t have to save up for everything, having a cash reserve can help you weather any financial storms.

How to save for a house

Now that you know some of the biggest costs associated with buying a house, the next question is: How do I save money for a house? If you’re trying to figure out how to save for a house, here are 10 strategies:

1. Make a plan. Set realistic short- and long-term financial goals. These could include a timeline for when you want to buy a house or when you want to have a certain amount of money saved up. Doing this can help keep you accountable.
2. Review your finances. Your budget can help you determine how much of a home loan you can afford, as well as a realistic timeline for the purchase. Make adjustments based on your income, expenses, and savings goals.
3. Eliminate expenses. Find ways to cut down on everyday expenses. This could mean reducing how much you spend on entertainment, dining out, or monthly subscriptions. It could even mean switching to a cheaper insurance plan or refinancing a car loan.
4. Pay down debt. High-interest debts can make it harder to save money, so paying them off can free up some extra cash. It can also lower your debt-to-income ratio (DTI), which mortgage lenders look at when determining whether to approve your loans.
5. Check your credit. Having good credit can help you qualify for the financing you need at the best interest rate. This could result in more savings over time.
6. Refinance your loans. If your credit score has improved, you may be eligible to refinance an existing loan. This could reset the loan term, but it could also lower your monthly payment amount and free up some money.
7. Increase your income. Taking on a side gig or secondary job could make it easier to meet your savings goals. Consider asking for a raise at your current job to earn additional income and build your savings more quickly.
8. Automate your savings. Make your savings automatic to stay on track with your goals and lower the risk of overspending.
9. Use a high-yield savings account (HYSA). Look into banks or credit unions with a HYSA. These accounts offer a higher yield on your savings than traditional accounts, which can help your money grow.
10. Ask for help. Look for down payment assistance programs or grants to help with upfront costs. Or ask friends or family members for a small financial gift that can be applied toward your home purchase. While you’re at it, don’t be afraid to ask for advice on how to save money for a house.