Here’s How to Save for a House (and Still Enjoy Your Avocado Toast)

published Jun 4, 2024
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Purchasing your first home is a milestone that most adults take very seriously — so seriously that even considering buying a home feels like a milestone in and of itself. But how do you save money for a house? How much do you need to save? Are there any unexpected expenses to expect?

It turns out that it’s not just about saving for a down payment. Financial figurehead, author, and founder of Her First $100K, Tori Dunlap, explains that saving for a house starts with addressing, understanding, and planning for the variety of fees you’ll be paying when you plan to become a homeowner. You may already be familiar with mortgage fees and down payments, but there are a variety of extra factors that play a role in saving for a house that you might not be prepared for.

“We’re talking about the mortgage, but we’re also talking about the property taxes, insurance, and if you’re buying a fixer-upper, you’re gonna have to pay for that,” she says. “If your pipes burst in the middle of the night, you’re paying for that, too. There are lots of costs to being a homeowner.” 

While you do that, you should also consider your credit score and how homeownership will affect the rest of your financial goals, like saving for retirement, paying down student debt, or paying for other monthly expenses. “If you’re paying a mortgage that’s more than you’re paying right now, does that mean you’re saving less for retirement? Does that mean you’re putting less money towards your debt?” asks Dunlap. She implores potential homeowners to take a holistic look at their financial situation as they figure out what, exactly, they can afford. 

And then there’s all the time it takes to save for a house. After all, a down payment is a significant sum of money — and saving it requires discipline and time. If you know a little bit about what you’re doing, however, you can make the process easier for yourself.

Here are more suggestions for how to save for a house:

  1. Understand that homeownership is a privilege in the U.S. While many countries believe in universal housing, the U.S. is not one of them. Saving for a house means knowing that the time and effort it takes to carve your dream life is a privilege — be patient with your goals.
  2. Consider your age and stage of life. You’ll want to take note of what phase of life you’re in. For example, someone in their mid-20s might prefer living in close proximity to their friends, which means searching for a home close to or within their shared city. That may also mean you don’t care about extra bedrooms or green space.
  3. Know you might have to build your dream home over time. It’s likely you won’t have all the money you need to buy your house at once. If you’re trying to build your dream home, you may have to build it over time. Renovations are expensive! Once you’ve saved enough for your down payment, give it some time before you begin renovating.
  4. Prioritize financial necessities and identify expenses you’re willing to cut. While Dunlap doesn’t believe in the old adage that you should skip your morning latte to save money, that doesn’t mean you can’t prioritize. Knowing what expenses to prioritize and which to cut can help redirect your money to achieve that long-term goal.
  5. Create a “save a downpayment” fund. Once you’ve decided which expenses to cut, direct that money into a down payment fund. This can also look like saving 5% of your paycheck, putting away $100 a week, or incorporating other creative ways to save a portion of your income.
  6. Work on your credit score. If you’re starting from scratch, use this time to build your credit score. That means paying your credit card bill on time, not reaching your credit card limit, and checking your credit report for errors to ensure you have a high credit score when it comes time to buy a house. 
  7. Explore different types of housing. Dunlap explains that cohousing — a form of housing where you own your own home but cooperatively care for the grounds or a common house — is more popular than ever before, with couples and individuals moving into condos and duplexes to split the costs of homeownership. Now’s the time to call up your friends and see who’s willing to turn their housing situation into a more collaborative space.