For many people, a house is their largest and most important investment. A house is not just a place to live and raise a family but also an asset with a fairly stable growth rate. Homeownership can unlock financial security, especially as you reach milestones like starting a family or retirement.
However, housing has become increasingly expensive in recent years. To make the goal of homeownership more attainable, you need to start saving money as soon as you can. That’s because there’s more to the cost of buying a home than the monthly repayment amount - consider upfront costs like the down payment, which typically must be at least 20% of the purchase price if you want to avoid paying mortgage insurance (if any).
SAVINGS GUIDE
Saving for a house may seem daunting, but with careful planning, you can make that dream more realistic. We’ve compiled a step-by-step guide of the most crucial steps you need to take to accelerate your home-buying goals.
1. Do Your Housing Research
Before you even move any pesewa into your housing fund, the first step you need to take is to research properties. For one, if you’re just getting started on your home-buying quest, you might not even know what you want.
Where can you afford to live?
How many bedrooms do you need?
Do you require some amenities within driving distance or are you fine with shopping at your local farmer’s market for groceries? All of these factors can affect the price of housing.
2. Set Clear Savings Goal
A savings goal can ensure you’re putting away enough money to afford a home within your desired moving time frame. To get a rough estimate, set a target purchase date and work backward over the months it’ll take you to afford a down payment at your current saving rate. There are several points to consider when turning that rough estimate into something more exact.
i. What Size Down Payment Can You Make?
You don’t always need to make a 20% down payment. A lower down payment may be easier to afford in the immediate future and get you into a home sooner, which could help you build equity faster. But, unless you qualify for special down payment programs offered by your lender, you’ll need to pay private mortgage insurance, a separate fee assessed by your mortgage lender until your home equity is greater than 20% of the home value, which could take years.
You also could consider paying even more than 20%. Doing so could improve the long-term affordability of your home by taking out a larger chunk of your mortgage principal. You may be offered lower interest rates if you pay a higher down payment (i.e., you’ll start with a lower loan-to-value ratio, which lenders look upon favorably) and potentially save tens of thousands of dollars over the life of the loan.
ii. Where Are You Saving for Your Down Payment?
Different types of savings vehicles offer benefits and trade-offs. A savings account offers the most ready access to your cash and could pay interest as high as 5.00% - 8.00% APY or more as of August 2025. Your bank may allow you to create saving buckets for your account to categorize deposits as intended for the home purchase.
Another option is a Fixed Deposit. While fixed deposit require you to commit your cash to a specific term to earn the full value of interest, you may find slightly higher rates of return on fixed deposits than savings accounts. If you’re willing to wait out the term, that could get you closer to homeownership.
A third option is a taxable brokerage account. While investing in stocks and funds is riskier - in an economic downturn, your losses could be severe - your rate of return could outpace returns with savings accounts and CDs over a comparable length of time. Remember that you’ll need to pay capital gains tax on realized earnings.
iii. Moderate-to-High Risk Safe Options
You can consider committing 2-10% of your savings into ultra-safe forex or crypto trading and not try to be a hero timing the markets !!
3. Assess Your Current Financial Situation
Circumstances change, often dramatically. Economies go boom, and economies go bust. When deciding how much you need to save for a house, you need to plan for both good times and bad. Ask yourself whether you have enough savings to work towards homeownership and to cushion yourself and your family from job loss, an expensive medical bill, or other unexpected expenditures.
Buying a home is emotional, but making decisions based on affordability, not excitement is key. Sit down and assess your income, expenses, and savings potential. Identify areas to cut back to accelerate savings. You will know how much time you have to save for your down payment once you have clarity of your numbers.
Take stock of your household income, current investments, liquid cash funds, and any debt you owe. Lay out your current expenses in a budget, including day-to-day spending and long-term costs like loan payments, future vacations and leisure activities, and major purchases. Given those financial constraints, this will help you visualize how much of your income goes toward these spending categories and whether buying a house is realistic.
Your budget will show you where you can reduce spending. Keep in mind, however, that saving a few hundred bucks here or there likely won’t speed up your housing savings by any material degree since smaller savings would represent only a fraction of the down payment amount and could be offset by the increase in housing prices over time.
If you expect your parents or other family members to help, start having those conversations now. Factor in gift money that covers part of the mortgage or down payment.
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