I Bought a House Without Having to Save Up for Years — Here’s How I Did It

Our accountant was the one who first informed us that we’d made the miscalculation. We were in her home office filing our taxes when she mentioned that my husband’s withholding information had been incorrect. A lot had changed in our lives — a new job, a new baby, a wedding — but somehow we’d forgotten to update his W4 with the changes. Because we never adjusted our withholdings, too much tax was being taken out of my husband’s paycheck. 

This was the first year we were using an actual accountant instead of online software, so it was the first time a professional crunched the numbers and let us know about our lucrative mistake. We didn’t know it at the time, but we had been doing what so many people choose to do, and treating Uncle Sam as a forced savings account. 

Each month the money we could’ve been putting away ourselves was going to the federal government. Unlike money that would’ve sat in our bank account, it couldn’t be accessed when we decided that we wanted to splurge on takeout or to cover an unexpected expense like a busted pipe. 

As a family of four, who qualified for tax rebates and child related tax credits, once April rolled around we were owed a pretty large sum from the federal government. After our accountant explained the unexpected windfall we began to wonder if maybe we’d be able to buy a new house sooner than we’d expected. It had been our plan to buckle down and start saving up for the move, which we figured would take us about a year to make work. With our tax refund, we discovered we could speed our timeline up… by a lot. 

If we combined our tax refund and our existing savings, we discovered that we’d actually have a pretty good chunk of change to use for a down payment. Suddenly our plans for a future home seemed so much closer than before. 

Our mortgage broker told us that if we combined the almost $6,000 we received from the government with the nearly $4,000 we’d already saved up it would be possible to purchase now, but only if we did so using an FHA mortgage. This would let us get by with far less than the traditional 20 percent down. 

Our little accounting slip up allowed us to buy a home at least a year earlier than we thought we’d be able to. Not only that, but we turned it into an ongoing thing. When my husband switched jobs, we kept his withholdings exactly where they were. Our forced savings account had worked for us previously, we figured it would continue to as the years went on. 

Of course, things changed (hello, Covid-19) and my husband had to leave his job behind as our family made a pandemic pivot. Now we’re much more intentional with our savings. Since I’m self-employed we no longer have the benefit of a forced savings account through the government, and instead we count every penny to make sure we’re not the ones owing Uncle Sam in April.

Still, for families who don’t mind someone else earning the interest on their hard earned money, adjusting your withholdings on your W4 to ensure you get a big payday come tax time might be a great way to keep some funds earmarked for buying a home, as long as it doesn’t get in the way of creating a healthy emergency savings account. 

Doug Milnes with MoneyGeek, says that situations where people rely on “forced savings” or building a savings account by setting up automatic transfers to an account that is hard to access, may work for some, but that people shouldn’t use this method if it deprives you of emergency savings.

“I’m a bigger fan of having a side account that is out of sight and maybe a little harder to access,” he explains. “Then set up a draw from your regular accounts. The benefits to this strategy is [that] your money earns some nominal amount of interest but more importantly, if you have an unforeseen emergency you can access that cash.”