One of the biggest hurdles of buying a home is saving up for one. From down payment to closing costs and moving expenses, it can be expensive to buy a home. If you’re just beginning to think about buying a house then you may need to take some time to save for a house.
In this Redfin article, we’ll outline how to save for a house in nine steps. Whether you’re buying a home in Cleveland, OH, or a condo in Richmond, VA, there are plenty of small and big ways to help you save for a house – and become a homeowner.
How much should you save for a house?
First, it’s important to determine how much house you can afford. How much you need to save for a house is going to vary depending on your finances, goals, and where you live. Before you start saving, it’s important to set a clear goal by considering these three major costs:
1. Down payment
The down payment is one of the biggest upfront costs when buying a home. While some loan programs allow down payments as low as 3%, saving more has long-term benefits.
- Lower monthly payments: The more you put down, the less you borrow, which reduces your monthly mortgage cost. Even increasing your down payment from 3% to 10% can lower your payment by a few hundred dollars per month.
- Avoid private mortgage insurance (PMI): If you put down 20% or more, you won’t have to pay PMI, which can add $100–$300 to your monthly mortgage.
- Better loan terms and interest rates: Lenders often offer better interest rates for buyers who make larger down payments, saving you thousands over the life of the loan.
If saving 20% isn’t realistic, putting down at least 5–10% can still provide meaningful long-term savings. The key is balancing buying sooner with a smaller down payment versus waiting to save more and reducing future costs.
2. Closing costs
Closing costs range anywhere from 2-5% of the home’s purchase price. These fees cover everything from the inspection and appraisal to insurance and lender fees. Some buyers…