How to save for a house: Tips and things to consider

Your dreams of homeownership might include visions of you relaxing in a backyard, never worrying about moving or having a longer commute to work. But in reality, owning a home requires thousands of dollars in mortgage payments and maintenance. 

Turning your homeownership dream into a reality requires strategic planning and disciplined saving habits. Many people want to learn how to save for a house while managing other financial priorities, and the process can feel overwhelming without a clear roadmap. 

Let’s look at the steps you can take to make homeownership achievable and sustainable for your financial future so you can settle into the home address of your dreams.

Research the housing market

Before saving for a home, you need a clear picture of what homes cost in your target area. Housing prices vary dramatically between neighborhoods, cities, and regions. Your savings goals should reflect the reality of your local market rather than the national average, which is about $398,400 for 2025.

There are several things you can do to figure out prices in your local housing market: 

— Browse online real estate platforms for current listings

— Attend open houses in your target neighborhoods

— Speak with local real estate agents about pricing trends

— Monitor prices over several months to identify patterns

In hot markets where homes sell quickly, you might need a larger down payment or a faster approval process to compete, while you may have more negotiating power and time to save in slower markets. Understanding the market you’re trying to buy into helps you set realistic expectations and adjust savings goals accordingly.

Establish your savings goals

Creating specific, measurable savings goals transforms the abstract concept of "buying a house" into actionable financial targets. Rather than simply hoping to save "enough," you need concrete numbers that account for all homebuying expenses, not just the purchase price.

There are several essential components of a home savings goal**:**

— Down payment: Typically 3-20% of the home's purchase price

— Closing costs: Usually 2-5% of the home's value

— Moving expenses: Professional movers, truck rental, packing supplies; totals vary depending on how much stuff you have and how far you’re moving

— Emergency fund: 3-6 months of homeownership expenses for unexpected costs

Set milestones

Setting both short-term and long-term milestones keeps you motivated throughout the saving process. Break your total goal into monthly or quarterly targets, and celebrate when you hit these benchmarks. A clear timeline also helps you evaluate whether your current savings rate will get you to homeownership within your desired timeframe. 

Follow the 28% rule

The 28% rule provides a helpful guideline for determining how much house you can afford. Under this rule, your monthly housing costs should not exceed 28% of your gross monthly income. Housing costs include your mortgage payment, property taxes, homeowners insurance, and private mortgage insurance if applicable.

While the 28% rule offers a good starting point, your financial situation might support a different percentage. Consider your other debts, lifestyle expenses, and financial goals when determining your comfort level. 

Better's mortgage calculator can help estimate monthly mortgage payments for different home prices and down payment amounts, making it easier to see how various scenarios fit within your budget.

...in as little as 3 minutes – no credit impact

Determine your down payment

Your down payment represents the most significant single expense in the homebuying process, and determining the right amount requires balancing several factors. Traditional payments range from 5–20%, eliminating the requirement for private mortgage insurance (PMI) and reducing your monthly payments. Many loan programs accept much smaller down payments, some as low as 3% or even 0% for qualified buyers, but they might come with extra long term fees. 

Here are some pros and cons to the amount you use for your down payment.

Down Payment Amount	Pros	Cons
20% or more	No PMI required - Lower monthly payments - Immediate equity	Longer saving timeline - More cash tied up - Higher opportunity cost
10-19%	Faster homeownership - Moderate PMI costs - Good equity position	Some PMI required - Higher monthly payment - Less negotiating power
3-9%	Quick path to homeownership - Preserve cash for other needs - Lower opportunity cost	Higher PMI costs - Larger monthly payments - Less equity cushion

When saving for a down payment on a house, remember that the money needs to be readily accessible when you're ready to buy. Down payment funds shouldn't be invested in volatile assets that might lose value when you need them most. 

Keep in mind closing costs and additional expenses

Down payments grab most of the attention, but closing costs and other homebuying expenses can add up to several thousand dollars. Planning for these expenses upfront prevents financial stress and helps ensure a smooth transition to homeownership.

— Closing costs (2-5% of home price): Loan origination, home inspections, appraisals, title insurance, attorney services

— Moving expenses: Professional movers, truck rental, packing supplies, storage

— Immediate home needs: Utility deposits, home repairs, new appliances, furniture

— Ongoing ownership costs: Property taxes, homeowners insurance, maintenance, repairs, homeowner association fees

Setting aside money for these ongoing expenses helps avoid financial surprises and maintain your home from day one.

The best ways to save for a house

Once you know how much money you need to save, use these tips to achieve your savings goals and reach homeownership faster.

Create and stick to a strict budget

Track your income and expenses for several months to identify spending patterns and find opportunities to redirect money toward your house savings account.

Budget optimization steps:

— Review bank and credit card statements for the past 3-6 months

— Categorize expenses into needs vs. wants

— Identify areas where you can reduce spending without significant lifestyle changes

— Set realistic targets for discretionary spending categories

When reviewing your expenses, focus on distinguishing between needs and wants. While you shouldn't eliminate all leisure spending from your budget, temporarily reducing discretionary spending can accelerate your home savings timeline.

Increase your income

Boosting your income provides more money to save without requiring you to dramatically cut expenses. Even a few hundred dollars in additional monthly income can shorten your saving timeline considerably.

Income-boosting strategies:

— Explore overtime opportunities at your current job

— Start a side hustle or freelance work in your spare time

— Sell items you no longer need or use

— Consider career advancement opportunities or additional education to improve earning potential

Open a dedicated house savings account

Keeping your home savings separate from other accounts helps you track progress and resist the temptation to spend the money elsewhere. Look for high-yield savings accounts that earn more interest while keeping your money easily accessible. 

Some banks offer specialized homebuyer savings programs with additional perks or higher interest rates. Compare options and choose an account that maximizes your earnings without imposing restrictions that might interfere with your homebuying timeline.

Improve your credit score

A higher credit score qualifies you for better mortgage rates, which can save thousands of dollars over the life of your loan. Even minor improvements in your credit score can result in meaningful savings.

Here are some credit improvement tactics:

— Review credit reports for errors and dispute inaccuracies

— Pay down existing debts to improve utilization ratios

— Make all payments on time consistently

— Avoid opening new credit accounts while preparing to buy

Automate your savings

Set up automatic transfers from your checking account to your house savings account each payday. Treating your savings like a fixed expense ensures consistent progress toward your goal and removes the temptation to skip months when other expenses arise.

Automation is one of the most effective strategies when figuring out how to save for a down payment on a house because it removes the decision-making from the process.

Take advantage of windfalls

Direct any unexpected money toward your home savings rather than lifestyle inflation. Tax refunds, work bonuses, gifts, or side income can substantially boost your savings progress.

Reduce housing costs temporarily

If you're currently renting, consider ways to reduce your housing expenses while you save. The money you save on rent can go directly toward your future home.

Temporary housing cost reduction options:

— Find a roommate to share rent and utilities

— Downsize 

— Move to a less expensive area temporarily

— House-sit or caretake for others for extra income

Review and reduce recurring expenses

Examine your monthly subscriptions, insurance policies, and service contracts for opportunities to save. Monthly savings add up over time and free up more money for your savings plan for house purchases.

Common areas for recurring expense reductions:

— Cancel unused subscriptions and memberships

— Shop around for better insurance rates

— Negotiate with service providers for better deals

— Switch to more affordable phone, internet, or cable plans

Explore low-down payment mortgage options

Many lenders offer mortgage programs to help buyers who can't make traditional 20% down payments. Government-backed loans like Federal Housing Administration (FHA), Veteran Affairs (VA), and USDA mortgages often require much smaller down payments and have more flexible credit requirements than conventional loans.

Here are some popular low-down payment mortgage options:

— FHA loans: As little as 3.5% down for qualified borrowers with credit scores of 580+

— VA loans: 0% down payment for eligible veterans and active service members

— USDA loans: 0% down payment for homes in qualified rural and suburban areas

— Conventional loans: Some programs offer 3% down options for first-time buyers

While these programs may include mortgage insurance or funding fees, they make homeownership accessible to buyers who might need years to save for a traditional down payment. Research what's available in your area and compare the long-term costs of different loan options.

Better offers a comprehensive range of mortgage loan options, including government loans designed to help make homeownership more affordable. Our loan officers can help you understand which programs you qualify for and how they fit into your financial picture.

Ready to become a homeowner? Better can help

Saving for a home requires patience, discipline, and strategic planning, but it's an achievable goal with the right approach. By researching your local housing market, establishing clear savings goals, and implementing proven tips on saving for a home, you can build the foundation for successful homeownership.

Better is here to support your homeownership journey with competitive rates, a range of loan options, and technology designed to make the mortgage process faster and more transparent. When you're ready to take the next step, we can help you find the right loan for your situation and guide you through the path to homeownership.

...in as little as 3 minutes – no credit impact