10 Realistic Ways to Save for a Home (Even When the Dream Feels Out of Reach)
Buying a home has always been a big goal — but with housing costs, mortgage rates, and everyday expenses climbing, it can feel like an impossible one. If you’re wondering how you’ll ever save enough for a down payment, you’re not alone.
Still, homeownership isn’t off the table. It might just take a different approach. Whether you're starting from scratch or already saving, here are some smart, realistic steps you can take to move forward — even in today’s tough housing market.
Key takeaways:
- You don’t need 20% down to buy a home.
- Small savings can add up faster than you think.
- Explore first-time buyer assistance programs.
- Look for ways to boost your savings with side income.
- Consider more affordable home options.
Let’s be honest — buying a home feels tough right now
Housing prices have soared in recent years. Interest rates have nearly doubled. And with inflation stretching grocery budgets, gas money, and savings even thinner, it can feel overwhelming.
It’s no wonder so many people feel like owning a home is out of reach.
But there’s hope — especially when you break the process into smaller, manageable steps. The key is knowing your options, looking beyond traditional paths, and making the most of what you have right now.
10 smart ways to start saving for a home
1. Open a high-yield savings account for your home fund
Create a separate savings account specifically for your future home. A high-yield option can help your money grow faster with interest and keeps your goal front and center. Set up automatic transfers from your checking account to your home fund each payday.
2. Set a monthly savings goal you can stick to
Take a close look at your income and expenses, then set a realistic savings target. Starting small — like $100 a month — can still make a meaningful impact over time.
3. Cut unnecessary spending and save the difference
Review your regular spending to identify areas to trim, such as dining out, subscription services, or impulse purchases. Funnel those savings into your home fund.
➢RELATED: 20 Frugal Habits to Make Your Money Go Further
4. Use tax refunds and bonuses to boost your down payment savings
Instead of spending windfalls like tax refunds or work bonuses, deposit them directly into your home savings account to accelerate your progress.
5. Consolidate high-interest debt to save more each month
Rolling multiple debts into a single loan with a lower interest rate can shrink your payments and help you put more toward your home fund.
➢RELATED: Understanding Debt Consolidation
6. Start a side hustle to increase your home-buying budget
Earn extra income through freelance work, rideshare driving, or selling items online — and commit all earnings to your home fund for faster results.
7. Improve your credit score before you apply for a mortgage
Pay off debts, make on-time payments, and keep credit card balances low. A stronger credit score can unlock better loan options and lower interest rates.
8. Track your savings progress and adjust as needed
Monitor your savings monthly to stay motivated. If your income changes or you find new ways to save, adjust your plan to reach your goal faster.
9. Delay major purchases until after you buy a home
Avoid financing large expenses like a new car or furniture while saving. Big purchases can raise your debt-to-income ratio and hurt your mortgage approval chances.
10. Consider temporary downsizing of your current housing costs
Living with family, getting a roommate, or downsizing can cut housing costs and free up extra cash to save faster. Some couples have downsized dramatically — even moving into a studio apartment with a pet — to reduce expenses and accelerate their savings.
It can be tough to give up short-term comfort, but for many, the long-term reward of homeownership is worth it!
Understand what you really need for a down payment
A common myth is that you need 20% down to buy a house. The truth is that most first-time buyers don’t come close to that because a down payment depends on the lender and the loan type.
Here’s a breakdown of common loan types and the down payments needed for each:
FHA loans
An FHA loan is a type of mortgage insured by the Federal Housing Administration, designed to help more people become homeowners by allowing for lower credit scores and down payment amounts.
- Typical down payment: 3.5%
- Best for: Buyers who may not yet qualify for conventional financing, first-time buyers, or those with limited savings.
Conventional loans
A conventional loan is a type of mortgage that isn’t backed by a government agency and is typically offered by private lenders like banks or credit unions. These loans usually require a higher credit score and a larger down payment.
- Typical down payment: Between 5% and 20% but can offer lower overall borrowing costs.
- Best for: Borrowers with strong credit and steady income who want more flexibility in loan terms and property types.
USDA loans
A USDA loan is a government-backed mortgage that often includes lower interest rates and reduced mortgage insurance to help eligible buyers purchase a home in designated rural or suburban areas.
- Typical down payment: 0%
- Best for: Low- to moderate-income buyers who meet income and location requirements and are looking for an affordable path to homeownership outside major cities.
VA loans
VA loans are a mortgage benefit available to eligible veterans, active-duty service members, and some surviving spouses. VA loans are backed by the U.S. Department of Veterans Affairs, require no private mortgage insurance (PMI) and offer competitive interest rates.
- Typical down payment: 0%
- Best for: Those who have served our country.
👉 Try a mortgage calculator to estimate how much you really need based on your target home price.
Explore first-time homebuyer programs
Many states and cities offer first-time homebuyer assistance that can help cover your down payment, closing costs, or both. These can help you afford a home sooner than you think. Assistance may be in the form of:
- Grants (you don’t have to pay them back)
- Forgivable loans
- Deferred loans (paid later or only if you sell)
Start by checking with your state’s housing authority or a local HUD-approved housing counselor.
Look beyond traditional homes
Not every home needs a white picket fence. There are more affordable paths to homeownership worth considering:
- Condos (condominiums)
- Townhomes
- Manufactured homes
- Modular homes
- Tiny homes
- Multi-family homes (e.g., duplexes or triplexes)
- Co-ops (housing cooperatives)
- Fixer-uppers
Exploring options like these could help you become a homeowner sooner than expected.
Let homeownership be your goal — not your stress!
You don’t need a perfect credit score or a massive savings account to start working toward your dream home. With the right knowledge, tools, and mindset, you can take steps toward ownership that work for your life and budget.
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Notice: Information provided in this article is for informational purposes only. Consult your attorney or financial advisor about your financial circumstances.
About the author
Bree Ewers is a senior editor, copywriter, and content writer whose work has been featured across the media, small business, and financial industries. She operates Nomad Freelance Content from her home office in Portland, Oregon.