There’s no doubt about it — buying a home is a big deal. Whether it’s a quaint little starter house or a carefully constructed dream home, purchasing a place to live is a huge financial milestone.

Buying a home will also, in most cases, be the most expensive purchase you’ll ever make. With the average home value sitting just under $410,700—plus inspections, closing costs, agent commissions, mortgage loans, and interest rates—buying a home can feel a bit overwhelming, especially for first-time homebuyers.

While homeownership takes some serious planning, it’s definitely doable. Use these tips and strategies to save up enough money for a new place of your own.

So, how much will you need?

The short answer is that it depends on a few factors. Do you want to build your own place? Will the property you’re looking at need repairs or renovations? What does your credit look like? 

Here’s the bottom line: you’ll need enough money to cover the costs of buying the home, plus any renovations needed and the additional costs that come with moving. Plus, you’ll need to handle the ongoing costs of your mortgage, property taxes, and insurance. Let’s take a look.

Your down payment

Your biggest upfront expense when buying a home will usually be the down payment — you’ll pay a percentage of the home’s purchase price before moving in, and you’ll borrow the rest. This is often required by the mortgage lender to lower their risk.  

How much can you plan on paying? Well, that depends on a variety of factors (including your credit score), but plan on a minimum of 10% of the purchase price. 

If your credit score isn’t in the upper echelon (hey, no judgment), expect to put down close to 20% for your best chance of consideration. This can also help you sidestep private mortgage insurance (PMI), which would make you responsible for a lender-protection premium.

Remember, buying a home isn’t like clothes shopping — there’s often some wiggle room in the price. Negotiating can make a real difference in your down payment savings as well as your mortgage.

Closing costs 

Along with your down payment, you’ll be responsible for taking care of closing costs — separate fees for the legal process of transferring home ownership. 

If this is your first time buying a home, make sure you factor in those closing costs when you’re starting to crunch the numbers. They’ll usually be around 3-6% of your mortgage amount. 

Mortgage 

Whatever you don’t have in cash, you’ll need to borrow. That total amount can be eye-popping, especially for a first-time buyer. Just remember you’ll have a long time to pay it back — often 30 years. 

The other piece of good news is that interest rates tend to be lower for homes than other loans. That’s because the house itself acts as collateral. Any good real estate agent can help you run the numbers to see what your monthly payments will be at different loan amounts and rates.

Taxes and insurance

Your new home will come with annual property taxes, and your mortgage lender will require you to keep a homeowner’s insurance policy on the property. In some mortgages, taxes and insurance will be covered by your monthly payments. In others, they won’t be. 

Be sure you understand whether these are separate costs you’ll need to cover.

Home repairs and renovations

It’s easy to focus on saving money for your new home, but don’t forget any additional expenses you may need to put into your existing residence to sell it. A lived-in home can definitely need a little TLC when it comes time to change ownership. 

A walk-through with a realtor or home inspector (or both) will give you an idea of what you may need to put into your home before you sell it.

On the other side of the deal, be aware of repairs and renovations when buying your new home too — especially if you’re moving into a fixer-upper or a home in need of upgrades. Stay mindful of what’s realistic given your budget. 

It can be tempting to spend every penny you save up on the purchase price of the home itself, but it’s a good idea to hold some of those funds back for unexpected expenses. You don’t want to find yourself in a tough situation if you need to repair a deck, for example, or if your air conditioner gives up the ghost. 

Moving costs

No matter how excited you are about your new place, moving can be stressful. To mitigate that headache as much as possible, consider hiring a professional moving company. 

While it may be alluring to round up a few pals and rent a U-Haul, that runs the risk of damaging your possessions, not to mention the risk of personal injury. 

When hiring movers, take a look at online reviews and make sure the company operates across the entire geographical region of the move. Budget for the move itself plus a tip for your movers.

Consider compensating them based on the size of the move, their efficiency, and the weather — $50 per mover will show them they did a great job. 

How can you save to buy a home?

Ready to start saving for the home of your dreams? These 9 tips can help you afford a wonderful property you can live and thrive in for years to come. 

1. Set your savings goals

The best way to get started is by deciding exactly what you can spend. 

For your target mortgage payments, start with your gross monthly income — your monthly pay before things like taxes get taken out. Multiply that number by 0.28 to figure out 28% of it. Ideally, you want to keep your mortgage payments at or below that amount.

For your down payment, shoot for 20% of the price if you can. The more money you can put down, the more you can reduce your lender’s risk, so the better the rate you’re likely to get. 

Once you have your targets, set a date for when you want to purchase the home, save up for that down payment, and start looking! Consider stashing your nest egg in a high-yield savings account to make your money go that much further. 

2. Budget, budget, budget (but make it easy)

Okay, this might seem sort of obvious, but it’s important to stay on track with your savings goal. While you may have the discipline to keep setting money aside when you first formulate your savings plan, staying disciplined and seeing it through can be tough. 

A personal finance app can help immensely. 

An app can automatically track your spending and help you stick with your goals. It can also help you discover easy places where you can save — every little bit helps!

Need some help figuring out a budget that fits your needs? We’ve got you covered.

3. Save windfalls of cash

Tax refund bigger than you expected? Throw it into your savings. Did your Great-Aunt Rita leave you a few bucks in her will? Savings account, for sure. Even if you’ve sold your old cache of Pokemon cards for a small fortune, you can pad your savings with that extra money. 

The more you save, the closer you’ll be to buying a home. When your funds find a home in your bank account, you can watch the money accrue interest and grow your savings.

4. Take on a side hustle

There’s a thriving gig economy in the United States and the opportunity to make extra cash has never been more prevalent. If you want to supplement your income, there are plenty of ways to make it happen. 

Own a car? Give people rides via Uber or Lyft, or even deliver groceries with InstaCart. If you’re an artist, Etsy provides a great platform to sell your work. Or you can even rub elbows with artists and actors working as a production assistant for shows in your hometown! 

Ready to get your side hustle started? Take a look at these 25+ ways to make extra income. 

5. Cut down on costs

Living frugally is especially helpful when saving for a large purchase, and it’s a good idea to cut down on costs wherever possible. 

This might look like skipping your daily latte and treating yourself on the weekend, or getting your inner Wolfgang Puck on and cooking at home instead of grabbing takeout. If you live in a neighborhood where walking or biking is an option, skip the car and save on gas (or ditch those Uber fees). 

Sift through your bank statements (or just look at your app) and see where your money is going — taking stock of superfluous purchases can make a huge difference in saving to buy a home.

Saving money is a surefire way to move toward your goals — we’ve got 14 tips for stacking extra cash. 

6. Go easy on the credit card

Racking up credit card debt is a surefire way to delay your financial independence and keep you indebted — especially if you’re tallying up big balances with higher interest rates. If you’re carrying a lot of credit card debt, it’s a good idea to pay it off before you start saving. 

Otherwise, your credit score could identify you as a risky investment to lenders, and you’re going to battle high interest rates on a mortgage.

Need to a plan to pay off your debt? You guessed it — we can help with that too.

7. Save money with a home inspector

When you find a home you love, be sure to hire an independent home inspector. A home inspection can minimize the risk of purchasing a defective property. 

Make sure the house is to your satisfaction before signing the agreement — you don’t want to purchase a new home and then find out a few weeks later that you’ll need to replace the roof!

Ask around among your family and friends to find the right inspector for you — it could end up saving you tens of thousands of dollars down the road. 

8. Down payment assistance

If you’re a first-time homebuyer, you may qualify for down payment assistance from grants, loans, or other assistance programs. Look into programs in your area to see what might be available, from grants to forgivable or deferred loans with no interest. You can also consider an FHA loan if you qualify.

9. Crowdsource your down payment fund

People set up crowdfunding for plenty of things these days — consider tapping your friends and family via GoFundMe to make a down payment on the home of your dreams. 

The inflation rates of the past few years have strapped many potential homebuyers for cash. A GoFundMe could be a great avenue to jump-start your savings.

Closing costs and closing thoughts

For most first-time buyers, a home will be the most expensive purchase you’ve ever made. But don’t worry, you’ve got this!

By calculating a figure that’s within your means and staying disciplined with your budget, you can make the down payment and closing costs, cover your mortgage payments, and enjoy the perks of homeownership.

Ready to start saving for your dream home? Download Quicken Simplifi today to automate your savings goals, monitor your spending, and buy a home you’ll love.