If one of your goals is how to save money for a house down payment, congratulations! Few things in life are as rewarding as becoming a homeowner. Make sure you know how much you’ll need for a down payment, and create a solid plan to save that money as quickly as possible.
How to Save Money for a House Quickly
Here are 5 tips on how to save for a house:
1. Set a Goal for How Much to Save
Before you begin saving, you’ll want to decide how much you need to save based on the house you’d like to buy. This means figuring out how much house you can afford and calculating how much you’ll need for a down payment.
The accepted practice is to use 20% of the cost of the house as a down payment. However, some lenders will accept less than this, and if you can afford the monthly payments with a smaller down payment, this could be one way to quickly save as much as you need to buy your dream house. So find out how much you’ll need and make that your savings goal.
2. Reduce your Spending and Debt
Once you know how much you’ll need to save, it’s time to start looking at ways to increase your current savings. The first place to do this is by reducing your current spending and debts. Pull out your monthly budget (or create one if you haven’t got a budget) and look at all the places you’re spending your money. You’ll likely find easy ways to save money:
- canceling subscriptions
- refinancing current loans
- switching to cheaper insurance plans
- cutting back on take-out
- avoid impulse spending
It would help if you also considered paying off or reducing your current debt. Try to get rid of high-interest credit cards or refinance them at a lower rate to increase your monthly savings.
3. Ask for a Raise
In addition to reducing spending to find some additional savings, you may want to consider asking for a raise to increase your income. Here are some tips to increase the chances of getting that raise:
- Make sure the timing is right. Don’t ask for a raise in the middle of a hectic period or during a huge project. The best time to ask for a raise is during your annual performance review. Another good time for a raise request is after you’ve completed a large or significant project.
- Be prepared. Never walk into a salary negotiation without being prepared. Gather data on your recent performance. Highlight your contributions to recent projects. Make it clear that you’re valuable to the organization and show your manager they can’t afford to lose you.
- Be confident and positive. Let your manager know your commitment to the company and express a willingness to take on more responsibilities.
4. Find a Side Hustle
If getting a raise from your current employer isn’t possible maybe you can give yourself a raise by starting a side hustle. For many, this has become one of the best ways to save money for a house. With the gig economy always expanding there are many opportunities for freelancers in a number of service industries.
If you have skills as a writer, artist, photographer, or other artistic talents you’ll find loads of offers that can put some extra money in your pocket by doing some work in your spare time. Some other ideas that can help you generate some additional income to save for a house include:
- Drive for a rideshare company like Uber
- Drive for delivery services like Favor
- Pet sitting or walking
- Test apps and websites through a service like Testbirds
There are literally hundreds of different opportunities to create additional income and help figure out how to save up for a house. Think about your hobbies and interests and there’s likely something you can do with that to make extra money.
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5. Ask for Help
Everyone needs help from time to time, and saving for a house down payment is one of those times where you might want to set aside your pride and ask your friends and family if they can help with your goals. It doesn’t have to be a loan either. Maybe explain that you are saving to buy a house, and ask them to consider giving you money instead of other gifts for Christmas, your birthday, or other holidays.
While not everyone will likely oblige your request, some probably will, and every little bit will help in reaching your savings goals. It would be best if you also kept in mind that mortgage lenders can handle gifts differently from other down payment funds. Be sure to read and understand the rules regarding gift money and down payments.
Saving enough money to make a down payment on a house is a big goal. If one of your goals is how to save money for a house down payment, congratulations! Few things in life are as rewarding as becoming a homeowner. Make sure you know how much you’ll need for a down payment, and create a solid plan to save that money as quickly as possible.
Consider cutting any unnecessary expenses, and beef up your income by asking for a raise or by going out and starting your own side hustle. The combination of reduced expenses and increased income is extremely powerful when you want to save money as quickly as possible to reach your goal.
Other ways you can use to get the money you need for a house downpayment include asking for gifts, reducing your debt, or selling off excess things you no longer need or use. Remember it isn’t enough to save for home costs now, you have to also plan for the future.
How much does the average person need to save for a house?
Home costs vary from state to state, but the national average home cost in the U.S. is $374,900. If you want to put 20% down you would need to save $74,980. However there are also closing costs to consider, and in 2020 the average closing cost in the U.S. was $5,749.
How long will it take for me to save for a house?
The amount of time it takes you to save for a house is going to depend on the price of the house, the amount of your down payment, and your current income and expenses. If you can increase your income and/or lower your expenses you’ll be able to save faster for your dream house.
How can I save for a house monthly?
One of the best ways to save for a house monthly is to include the savings as part of your budget, and then automate those savings. Set up monthly recurring transfers to a high-yield savings account and watch the balance increase month-by-month.