Email Post to a Friend: Saving Up For A House? Here's How Much You'll Need

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If you're prepping to buy a house, you'll need to set aside some cash. Here's how you can determine how much you'll need.

Buying a house starts with smart financial planning, and when you're in the market for a home, it's never too early to start saving. How much should you save, and what costs exactly will that money be going toward? While the exact details depend on the type of home and market, there are plenty of general guidelines you can use to come up with a plan. Our real estate agents have the details on how much you'll need when saving up for a house.

  • Saving for a Down Payment
    If like most buyers, you're planning to purchase a home with a mortgage, then your down payment is the largest factor to consider when saving. While there are loan programs that allow you to purchase a home with little or no down payment, making a substantial down payment can help you lower your monthly mortgage payments and pay less in interest over time. In general, saving for a down payment of at least 10 percent of the home's value is the minimum recommendation, but the more you can save for a down payment, the better.

  • Consider Closing Costs
    After the down payment, closing costs are the next largest factor to consider. Closing costs will typically be around 3 to 4 percent of the home's total sale price, and saving for them in advance will help you avoid any unpleasant surprises when it's time to close on your next home. Closing costs typically include the home appraisal and home inspection, along with title fees, taxes, and fees related to your loan.

  • Moving Costs and Other Expenses
    While moving costs represent a relatively small amount of the savings that you'll need, it's still worth planning ahead and having an idea of exactly how much it will cost to move your things into your new home. For a local move, you can plan on spending about $600 to $2,000 in most markets, depending on whether you rent a truck or hire a team of movers to handle the whole process for you. Of course, if you have friends and family who are willing to help you move as well as access to your own trucks, you can significantly cut down on the cost of moving.

  • Why Credit Score Matters, Too
    While you're busy saving, it's also helpful to take a look at your credit score and search for ways to strengthen it as much as possible. A higher credit score is very advantageous when shopping around with different lenders for a mortgage and makes life much easier when shopping for a home. Remember that it's also recommended to avoid opening new, large lines of credit for things like cars or personal loans just before purchasing a home.

  • How to Start Saving for a Down Payment
    The best way to start saving for a down payment is to lay out clear goals for how much you need to save, which will depend on where you're shopping for a home and what type of home you're planning to purchase. Then, look for any little (or big!) opportunities to cut costs in your day-to-day budget over time. Every little bit adds up, and it shouldn't take too long to start making progress when you have clear goals to work toward.

Whether you're selling your current home or shopping for D.C. homes for sale, our local real estate team is here to help with every step of the process. Contact us to buy and sell homes throughout the Washington, DC area.

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