Money·2 min read

Ready to Buy a Home? Here's What You Need to Know Before You Start Saving

accessibility, two women smiling in empty home
Design: theSkimm | Photo: iStock
June 8, 2022

Saving for a house can be tricky no matter what’s happening in the housing market. The good news: It’s still possible to buy a home. PS:Only if that’s what you want, because buying is not always better than renting.

Tell me how to save for a house. Where do I start?

Before you start saving, get clear on your goals. What are you saving for? Do you plan on going straight for your dream home?Or is a starter home your first step?And don’t forget must-haves (hi, safe neighborhood) vs. nice-to-haves (do you really need a garbage disposal?). And location, location, location.

You haven’t mentioned costs yet.

Once you know your goals, you can check online listings to see what homes that check all your boxes are going for. Then, you can pinpoint how much you’ll need for your down payment. Experts recommend 20% of the home’s value, but it’s not a hard-and-fast rule.

Now, the down payment isn’t the only expense you need to save for. Read: closing costs, aka the extras on your final bill before you sign on the dotted line.And being a homeowner comes with ongoing expenses you’ll need to plan for. Think: major and minor repairs.

Back up. Who pays closing costs?

Usually, you (the buyer). But the seller might be willing to cover some of the costs if you ask. You can also negotiate with your lender to lower your final fee. And if this is your first time buying a home, you might qualify for assistance from your local gov. Lots of first-time home buyer programs off to help out with closing costs and down payments. Check HUD listings to see what your state offers.

Got it. Now tips on how to save for a house please.

Here are a few ways to get closer to closing on that new house.

Go high-yield.

Using the right savings accounts can help get you to your goal. Hint: instead of a traditional bank, browse a few online banks and compare interest rates. Psst…think about CDs (aka Certificates of Deposit), too. They may not be as liquid as savings accounts, but they do tend to offer higher interest rates.

Automate it.

Set up automated transfers to your savings account to curb your overspending. Because it lowers the chances you’ll immediately spend the extra money you bring in.

Save your raise.

When you get a windfall of cash, send it to your savings account instead of your checking account. Think: tax refunds, bonuses, or the raise you negotiated. Buh-bye, lifestyle creep.


Saving is a major step in the homebuying process. And while you may not need to save 20% for that down payment, you’ll definitely need extra cushion for unexpected expenses.

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