With rent rates rising almost every year, saving up for a house can feel like an uphill battle. But with a solid savings plan—and a few simple cost-cutting measures— you can make your #homegoals a reality.
If you’ve been renting your home for a while, you’ve probably found that saving up for a down payment on a home isn’t just a challenge—it can feel totally out-of-reach!
Average rental rates go up each year by 3-5%. So how are you supposed to squirrel away money for a home of your own when you’re already sending more and more of your paycheck to your landlord, on top of all of life’s other expenses?
We get it. And that’s why we’ve put together this list of seven money-saving tips to help you afford the house of your dreams.
1. Set an ambitious (but achievable) goal
The first step to saving is to know (spoiler alert!) how much you want to save for a home. Make sure you account for a down payment, closing costs, any additional fees, and mandatory inspections. Give yourself a solid timeframe and a realistic goal: Say, $6,000 in the next year. The natural next step is to…
2. Hold yourself accountable
Now that you have a goal in mind, it’s time to keep tabs on your progress. Use a dedicated savings account to store your house money, rather than letting everything get mixed up in the same checking account. If you want automatic savings, set up your account to draft $150 from your checking account to your new house account each month, and you’ll likely never notice. That’s $1,800 in savings over the course of a year!
Want to start saving for a home? Set a realistic goal you know you can hit, and keep tabs on your progress to make sure you’re on track to hit it!
3. Trim those subscriptions
Netflix, Amazon Prime, your gym membership: Chances are, you’re paying for subscriptions you don’t use often enough. There are many free or low-cost apps (Mint, Goodbudget, PocketGuard) out there that you can use to track subscriptions and memberships you pay for each month. If you feel like you’re not getting your money’s worth, it may be time to purge them from your budget.
4. Cut out the extras
Want to know the real secret to savings? Cut out the expenses you don’t really need! Here are a few ways you can make small lifestyle choices and flex your budgeting muscles:
- Cook more meals, eat out less. Say goodbye to your delivery guy, and you’ll notice that you’re spending a lot less on tips and fees.
- Break up with your online shopping apps. You could consider going cash-only if that helps curb your late-night shopping habit.
- Cut the cable cord. Many homeowners and renters have found that they can access the same or similar content through Internet and streaming services!
5. Find a roommate
Want to know another popular way to save for a house while renting? If you’ve got an extra bedroom, you could be splitting your rent bill (as well as utilities, water, and various other bills) in half. Consider converting your home office or workout room into another full-time bedroom to make your monthly bill more manageable. If you’ve proven yourself to be a reliable tenant over the years, you could also try negotiating your lease with your landlord or see if they’re offering any deals. It never hurts to ask!
6. Opt for a “staycation”
Exploring a new city or jetting off abroad can be an unforgettable experience. Unfortunately, it’s likely to cost you a large chunk of your savings. If you want a getaway without breaking the bank, try a staycation in your hometown instead. You could get a night in a local hotel or Airbnb, pretend to be a tourist in your own city, or maybe treat yourself to a spa day (You don’t even have to leave home if you buy the right bubble bath!).
7. Try out a side-hustle
If you want to boost your income and supercharge your savings, you could always pick up a side gig. Think of part-time jobs you already enjoy. If you like meeting new people around town, you could join a ride service like Uber, or deliver food through a service like DoorDash.
If you’re all about arts and crafts, opening an Etsy shop would be a great way to make money and show off your creative side. You don’t have to get too formal here: Even small tutoring or pet-sitting gigs can add up to serious cash you can use for a home!
So, what are my next steps?
You’ve learned plenty of helpful tips on how to save for a house while renting… so what can you do with them? The first thing you should know is that you don’t need to save for years to come up with a 20% down payment. In fact, a low down payment could be the key to getting into your new home (maybe even right now)!
You can buy a house for as little as 3% down with a Conventional loan, or with no down payment at all with a USDA or VA loan. FHA loans are often popular among first-time home buyers, because of their flexible credit, income, and down payment requirements. You can typically buy a home with an FHA loan with as little as 3.5% down.
Simple steps, big savings
Does the idea of saving for a house while renting seem a little easier now? Most renters only need a little inspiration before they can start turning small savings into a sizable down payment!
Curious to know how much home you can afford? Our mortgage calculator can estimate your monthly payment based on home price, your down payment, loan term, and interest rate. And if you’d like to get moving sooner than later, you can always chat with one of our friendly Cardinal Financial loan originators.