Make your homeownership dreams a reality with these tips on saving for a down payment on a home
If you want to start saving for a house but don’t know where to begin. Explore this guide on saving to buy a house. Also, find practical advice about saving for a down payment and getting your finances in shape before applying for a mortgage.
Use tools from Citizens Bank to begin saving for a home
It’s important to have a goal in mind when you’re saving to buy a house. Most financial planners advise buyers to make a down payment of at least 20 percent to save on fees and private mortgage insurance. Our home savings calculator can help you determine how much you may need to save based on your price range, estimated down payment, amount currently saved and your time frame.
If you want to buy a house in the next few years, you may wish to save for a home in a variety of accounts to get the best return possible. Citizens Bank offers a home savings account , certificates of deposit, money market accounts and other traditional savings accounts that can help your money grow. When you open one of our savings accounts, you can use our Steady Save® feature to automatically transfer funds from your checking account to a deposit account in the amount and time frame that’s right for you. It’s a fast, simple way to start saving for a house.
Reach your goal of saving for a down payment with these tips
To begin saving to buy a house, you’ll want to review your current finances and think about the features you want in a home. While there are numerous ways to prepare for homeownership, these tips can help you save more effectively and find the home that’s right for you:
- Review your current savings: When you’re saving for a home, it may be tempting to use a portion of your emergency fund or retirement nest egg as part of your down payment. However, it’s important to keep these accounts separate to stay financially stable in the years ahead. Instead, consider which savings options will maximize your earnings and help you meet your goal in the time frame you’ve allotted, and open a new account (or accounts) designated to home buying. While it may mean you spend a bit more time saving to reach your goal, you’ll be glad to have those other funds stowed away in the future.
- Pare down your current expenses: Saving for a house may seem like a large goal, but cutting back on existing expenses can make a big difference. Small steps like packing a lunch or skipping your morning latte may help you get started, but don’t forget to look at other aspects of your lifestyle. For example, you may consider moving to a less expensive apartment, using public transportation to save on gas, cutting back on home energy use or getting a roommate. No matter where you cut back, make sure you reallocate those savings toward your down payment goal.
- Earn extra income: A side job may give you more money to put toward saving for a home. If your schedule allows, look for part-time work on nights and weekends, such as dog walking, babysitting or freelancing and devote those paychecks to your home savings account. Even if you can’t work consistently, one-time gigs or money-making hobbies can help boost your progress toward your goal.
- Keep the change: If you frequently shop with cash, make a habit of setting aside coins and low denomination bills, then depositing money into your savings account monthly. While these small amounts may seem trivial at first, you’ll be surprised by how quickly they add up over time. Combining this basic savings method with other techniques can accelerate your savings and may also prevent you from spending this cash on other purchases.
- Set a realistic home budget: Consider your needs (number of bedrooms, amount of space, proximity to schools, etc.) and your overall financial situation before shopping for real estate. When you have an idea of how much your ideal home in your ideal location would cost, determine what the 10-20 percent down payment would be and how long you will need to save to reach that goal. Then decide if there are any “wants” you need to cut, or if your budget leaves you room to add more. Your budget should also factor the costs associated with renovations, upkeep and utilities, which could impact the price range of homes you’ll be looking at.
Open an account and start saving for a new home
If you’re thinking about buying a house, it’s important to plan ahead and create a savings plan that works for you. At Citizens Bank, we’re ready to help you achieve your goal with savings accounts and online tools to grow your savings quickly and track your progress. Open a savings account online today or stop by a local branch to learn more about which savings options are right for you.