Qapital’s 10 Best Tips for

Saving Money for a House

Buying a home is one of life’s biggest milestones. While getting the keys to your very own home is a moment that many people dream of, figuring out how to save for a house can be daunting if you don’t know where to start. That’s why we’ve compiled a list of our best tips for saving money for a house so that you have the resources and knowledge you need to make your dreams of homeownership come true.

Here are our suggestions for the 10 best ways to save for a house:

1. Set your budget

Setting a budget and sticking to it is an essential component of how to save money in general, but it becomes all the more important when it comes to saving money for a house. Qapital makes budgeting easy by helping you find your Spending Sweet Spot and keeping you accountable to it, so you can more easily work saving for a house into your monthly budget. Ultimately, how much house you can afford and how much you want to pay for a house will dictate how much money you need to save for a down payment on your future home. To set your budget and begin saving, take a look online at how much house you can afford. A representative from your bank or potential mortgage lender can also talk you through this process. Then, create a Goals account with Qapital where you can put the money that will eventually be spent on your down payment.

A general rule of thumb is that your mortgage should account for no more than 28% of your pre-tax income, and your total debt (including your mortgage payment) should not exceed 35% of your pre-tax income. There are some exceptions to this rule, particularly if you’re someone with a very high credit score who poses low risk to the lender, but overall, having a solid idea of your budget is the best way to begin saving for a house

2. Decide on a down payment

Once you have an idea of what you can afford, you can begin saving for your down payment. The down payment is the biggest expense you have to account for when saving money for a house. Most experts recommend at least 20% of the purchase price of the home as a down payment, which can be a considerable sum of money. The advantage to putting down at least 20% is that you’ll wind up with a smaller monthly mortgage payment. The downside, of course, is that 20% is a lot of money to have to save, and depending on the purchase price of your potential new home, coming up with that sum might take a while. 

That said, it is becoming more common for new home buyers to put down less than 20% as a down payment. It means a slightly higher mortgage payment, and you’ll probably be required to pay for private mortgage insurance to protect the lender against the potentially higher financial risk, but it is something to bear in mind when you’re saving for a house. 

3. Look into special homebuyer programs

If you’re a first-time homebuyer, consider looking into special homebuyer programs in your area. There are many grants and programs available – especially to first-time buyers – that can help ease the burden of saving for a house. Many of them will allow for down payments much smaller than 20%, and some don’t require a down payment at all, so long as you meet certain criteria. Some of these special homebuyer programs include:

  • VA loans: For active-duty service members, veterans, and their spouses. VA loans do not require down payments, and borrowers do not have to pay mortgage insurance premiums.
  • Fannie Mae Standard 97% LTV loan: First-time homebuyers are eligible for this program under FannieMae which only requires a 3% down payment and the completion of a homeownership education course.
  • FHA loans: If your credit score has taken a hit or you haven’t been able to save much money for a house but still need or want to buy your own home, loans through the Federal Housing Administration are one solution. You only need a credit score of at least 500 to qualify, though putting less than 10% down will put you on the hook for mortgage insurance premiums.

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4. Pay down debt

Remember that mortgage lenders take your existing debt into account when calculating how much of a loan they’re likely to give you, and that your total debt mortgage included – should not exceed 36% of your pre-tax income. Before you begin to save money for a house, it’s important to pay down as much of your debt as possible. Doing so will have a positive impact on your credit score and lower your overall debt-to-income ratio, which will make you a much more attractive candidate to potential mortgage lenders. Plus, it will help free up more money that can go toward saving for your new house. 

5. Save by paying your future mortgage

Behaving as though you’re already on the hook for a future mortgage payment is a great way to save money for a house while also mentally preparing yourself for the eventual change in budget and spending that will accompany your new purchase. For example, if you currently pay $800 per month in rent, but you’ve qualified for a mortgage that will cost you $1,200 per month, consider adjusting your budget as though you are already responsible for the $1,200 payment. On the first of each month, remove $1,200 from your checking account; $800 will go toward rent as usual, and then transfer the remaining balance to savings. This will help you save for your house and begin to adapt your spending habits to better account for how your mortgage payments will affect your monthly budget. 

6. Automate your savings

The best way to save for a house is by making saving automatic. Many experts recommend saving at least 10% of your monthly income, though if you are trying to save money for a house you’ll probably want to save a little more aggressively than that, if possible. Automating your savings means that you don’t have to worry about calculating how much to save each month, manually transferring that money, or potentially missing a transfer because you forgot or spent the money in your account before you could save it. Qapital can help you save automatically with Payday Divvy, based on parameters of your own choosing, which takes the hassle out of saving for a house.

7. Put other savings on hold

Under most circumstances, buying a home requires cashing out a pretty large sum of money. Similarly, many people may not start saving for a house until they’re relatively set on the idea of buying, which means having to save quite a lot of money in a fairly short amount of time, compared to other savings goals like retirement. The best way to save for a house when you’re serious about buying and working on a short time frame is to do so aggressively –and that means pressing “pause” on saving for other things. Yes – this includes saving for retirement! 

While we would never usually advocate for skimping on retirement saving, saving for a house is temporary. Directing all your extra cash flow toward saving for your down payment will go much faster if that’s your sole focus for a short period of time. 

8. Cut the extra expenses

Spending is the antithesis of saving, and each dollar you spend is a dollar that you’re not saving for your future house. Though it’s important not to not deprive yourself, each dollar counts when you’re attempting to save money for a house. While you’re aggressively saving, it’s best to take stock of your spending habits and make cuts to your non-essential spending. This means dining at home more often than going out, cancelling any unnecessary subscriptions, and putting all of that money toward saving for a house.

9. Get a side hustle

If you’ve cut way back on non-essential spending, automated your savings, and temporarily paused saving in other areas but still are looking for more ways to save for a house, consider picking up a side job that you can do in your spare time. All of your extra income can be put into the savings account you’ve created for your future home. Some examples of popular side hustles include:

  • Driving for a ridesharing service
  • Hiring yourself out as a handy person for at-home tasks or yard work
  • Renting out extra rooms in your home
  • Child care or tutoring
  • Dog walking or house sitting

10. Don’t forget the hidden costs

When saving for a house, a lot of people get hung up on having enough money for the down payment. That’s obviously an important part of the home buying process, but it’s not the only expense you’ll need to consider. Buying a house comes with a lot of other costs, such as inspection costs, closing costs for when the deal is finalized, and property taxes. You’ll also need to take maintenance or renovation costs into account as you save for a house. Similarly, if you’re buying a condo or a home in a community with a Homeowner’s Association, you’ll need to also factor in those monthly fees.

Though buying a home requires dedication, sacrifice, and a lot of hard work, by following these steps for saving for a house, you can stop dreaming of homeownership and make it a reality.

Saving for a House - FAQ

How do I save money for a house

The best way to save money for a house is by planning ahead. Determine your budget and how much you’d like to have for a down payment, and then develop an aggressive savings plan to help you meet your goal. This will probably mean pressing ‘pause’ on any saving that is not house-related and drastically cutting your non-essential spending so you can save as much money as possible toward your new house. You might also want to consider finding ways to earn extra income that you can immediately direct into the savings account for your house. The key to saving for a house is by saving as much and as often as you can.

What hidden costs should I plan for while saving for a house?

You’re right to assume that buying a house will cost more than the price you see on the listing. When people begin to save money for a house, they often forget that the down payment is just one of many expenses that come with purchasing a home. As you’re saving, don’t forget to take into account closing costs, inspection fees, and putting aside some money for any repairs or cosmetic changes you’d like to make once you move in. Also, if you’re planning on a down payment that is less than 20% of the purchase price of the home, you’ll need to allot additional money for mortgage insurance.

How can I save money for a house while renting?

If you’re a renter, you might actually have an advantage when it comes to saving for a house. Rent can often be negotiated with a landlord, whereas a mortgage payment cannot, so if you’re feeling particularly motivated and persuasive, talk to your landlord about a reduction in rent in exchange for taking on some additional responsibilities. Perhaps you can take care of mowing the lawn or removing snow, instead of having to pay for those services via your rent. You can also see if your landlord will reduce your rent in exchange for you doing some handiwork around the home, and put that extra money into savings. If none of that is possible, consider getting a roommate to help keep your costs down so you can continue to save money for a house.

Where should I keep the money I’m saving for a house?

Since you’ll want the money you’ve been saving for a house to be reasonably accessible, it makes sense to put it somewhere it won’t be tied up for a long time. A traditional savings account would be just fine, but you’ll want to make sure that you keep your home fund separate from your other savings goals. Qapital helps users save money for a new home by creating specific accounts for each of your goals and by helping you divvy up your paycheck so you can make sure you’re on the right track when it comes to saving for a house. You can use a photo of your dream home as a cover photo for your Qapital Goals account to keep up your motivation to save!



Nothing herein should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Qapital Invest LLC (“Qapital Invest”) is registered with the SEC as a Registered Investment Adviser. The information provided herein is for informational and general educational purposes only and is not investment or financial advice.

Past performance is no guarantee of future results. Any historical returns, expected returns or probability projections are hypothetical in nature and may not reflect actual future performance. This content does not constitute a complete description of Qapital Invest’s investment advisory services. Brokerage services will be provided to Qapital Invest clients by Apex Clearing Corporation, an SEC-registered broker-dealer and member FINRA/SIPC.