How to Save Money for a House: Steps to Get Moving

Set a savings target, make saving automatic and look for ways to minimize expenses when saving for a house.
Barbara Marquand
By Barbara Marquand 
Edited by Beth Buczynski

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Saving enough money to buy a house might seem like scaling Mount Everest, but don't let that stop you from taking the first steps. Once you get moving, you might find the peak more accessible than you expected.

Here's how to make the climb:

1. Set goals to save for a house

Decide a total money target and a deadline for getting there. Here are the main things you'll need to save for:

  • The down payment. This is the upfront cash that a borrower pays when getting a mortgage to buy a home. Down payment requirements vary by mortgage type and by lender. Some may be as low as 3%. A down payment calculator can help you determine an amount to save.

  • Closing costs. These are the fees you pay to finalize a mortgage and are typically about 2% to 5% of the loan amount.

  • Moving and other expenses after you buy the home. Even if the house is in turnkey condition, you may find yourself making a surprising number of trips to hardware and home furnishing stores.

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2. Scour your budget for ways to save

You don't have to give up lattes — the cost of a coffee or two a week won't finance a home anyway. But minimizing other expenses may help you save for a house faster. Here are a few places to look:

To find other ways to reduce expenses, track your spending for a month to see where your cash goes.

3. Automate and maximize savings

Set up automatic transfers from your checking to savings accounts, so the money is out of reach for immediate spending.

The stock market is too volatile for short-term savings — less than 10 years — so when saving for a house, keep your money in a high-yield savings account, a money market account or certificates of deposit instead.

The CDs should be timed to mature just before you want to buy a house. Maximize your savings by getting the highest interest rates possible.

4. Save raises and windfalls

Transfer tax refunds, bonuses, raises and any other financial windfalls to savings before you get a chance to spend them. These will boost both your savings and motivation, and may soon put homeownership within sight.

5. Earn some extra money

Look for ways to make some extra cash when saving up for a house, such as doing freelance work online, making deliveries or trading in old phones and electronics.

Just beware of scam "opportunities" that ask for upfront money or financial information. Check out any companies before hopping on board, and avoid side hustle tax traps.

6. Track your progress and keep going

Check your savings progress at least every month. NerdWallet's free app can help. Slow and steady progress is worth celebrating. Post a savings chart on the refrigerator or photos of your dream home to keep you inspired.

Frequently asked questions

To quickly save money for a house, take a multi-pronged approach: Cut extra expenses where you can, set aside raises, tax refunds and other windfalls, take on a side gig to earn extra income, if possible, and keep your savings in a high yield savings account.

It's possible to buy a house with no money down. Both USDA loans for rural residents and VA loans for military members and veterans require no down payment. Some lenders also offer their own no-down-payment options.

Find out if a down payment assistance program is offered through your state or local government or a nonprofit. These programs offer grants and loans to cover the down payment. Many of the loans are forgivable or have deferred repayment.

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