When you are thinking about buying a new home, the conversation and stress around the idea of how you will be able to afford it is a big one. There are many costs to think about when buying a home including down payment, closing costs, inspections, mortgage, etc. Plus, there are moving expenses if you need to hire a moving company or rent a U-Haul to move your furniture.
Saving up for a home may seem like an impossible task but do not worry! As long as you start saving and plan far enough in advance of when you want to buy, you will be in good shape. There are many steps and ways that you can take to ensure that you will be able to afford a home and you can reach your home buying goals this year.
First things first, figure out how much home you can actually afford. You do not want to overestimate what you can afford when looking to buy a house. Getting pre-approved will show how much you can afford to pay for a home.
Next, determine how much you want to save for a down payment. You may have heard that you need to put at least 20% down but that is not true. Though putting 20% down will save money over time, it is not required. Depending on your credit score and income, you might be able to get a much lower down payment as little as 3% down. If you qualify for certain loans like a VA loan, you might even be able to put 0% down. It all depends on your certain situation. Once you figure out how much home you can afford, you can then figure out realistically how much you can put down.
The first step in saving money is budgeting. Figure out where your money is going and how much. Note how much you spend on necessities such as rent, credit cards, utilities, etc and then note how much you spend on nonessentials like restaurants and entertainment. Once you do this, you can figure out how much you can cut back on and where you need to cut corners to be able to save more money.
If you are prone to things like shopping and eating out, try to limit spending here or cutting it out entirely. This will help you a lot along the way. You may even notice you spend more than you thought on things like this.
In order to receive more money coming in, you can pick up a side hustle, if you have the time. You can drive for a rideshare company or a food delivery company. You can also pet sit or babysit if you know people who are going out of town or need a night off.
When saving to buy a house, it all comes down to having a solid plan in place. Research your loan options and figure out how much your down payment can be. When it is time, apply to be pre-approved and get the process started!