Saving for a House: 16 Practical Tips (w/o Starving Yourself)

The most significant barrier to buying a house is amassing the necessary capital funds to convince a bank to give you a mortgage.

Typically, you need 10% of the house’s purchase price with about six months of living expenses as a contingency fund for legal fees, removal costs, and start-up furnishings and repair.

More capital is always better than less.

How can you improve your route to buying your house instead of renting?

how to save money to buy a house

The 16 Ways to Save Money for a House

1. Investigate Saving Options

The idea behind saving is straightforward: put your money in a pot and watch it accumulate. But investigate your saving options and if your money can earn interest or dividends while you are saving.

Investigate your options from bank savings accounts to bonds.

One question to ask yourself is about restricting access to your money for the necessary period.

If you can put your money beyond your reach, you get a better interest rate and remove the temptation to book that dream holiday.

In practice, you might want to adopt a two-pronged approach – put three quarters out of reach and have one quarter for potential emergencies.

You can only save if you have disposable income. Most people get into the habit of spending their disposable income because – well, it is disposable.

If you want to save, you need to generate more disposable income by a combination of earning more and reducing spending.

2. Start Saving with SMART Goals

If you need to amass enough money to buy a house and don’t have the capital, you need to save.

Using the SMART approach will get you to your target funding level more efficiently.

SMART means:

  • Specific – don’t have a vague idea that you need to save enough to buy a house; set the amount you are going to amass and how you will do it with a plan.
  • Measurable – this part is easy – you know how much money you need in your house fund, and you know how much you have at every month-end.
  • Attainable – you may want a dream home in the country with acres of land, but your first house needs to be affordable. You can dream bigger for your second or third.
  • Relevant – do you want to buy a house? If you think it may be a good idea, but there isn’t any driving ambition behind the desire, you will not put in the effort to reduce your spending and save money.
  • Time-Limited – if you don’t set a timescale on your homeownership ambitions, it will always be someday. You need enough time to save but think in terms of five years and reassess or whatever timescale works for you.

3. Move Jobs

If you move to a better-paying job, you increase your disposable income.

If you immediately divert your extra income (because you were living on less in your old job) into your savings, you get to save more without feeling the impact of spending less.

The other benefit of increasing your employment income is that it increases the mortgage offer enabling you to upgrade your home buying expectations.

4. Move to Save Rent

A little short-term pain by moving to a cheaper rental property enables you to reduce your outgoings and save towards your house buying goal.

SMART goals are time-limited, so you know that you accept a decrease in your accommodation standard to improve your future.

If you can find a cheaper rental property closer to your workplace, then you get double savings on rent and your commute.

5. Reduce Spending

Put your spending on a diet by taking in a packed lunch, buying less takeaway coffee, ditch the gym, and looking for ways to reduce the amount you spend or stop entirely. Many small slices add up to a lot of savings.

You don’t need to suck all the enjoyment out of life while saving, but you need to plan a regular saving amount that meets your SMART goals.

It is best to pay that amount straight into your saving fund every month so you live on what’s left while saving for your first house.

6. Ruthlessly Sell Your Surplus Stuff

Most people have too much stuff in their lives, clothes that you don’t wear, gadgets you don’t use, and impulse buys that lose their charm.

Your trash is a treasure to someone else – sell everything that you don’t use or love. Plus, it gives you less stuff to move when you buy your first house.

7. Get a Side Hustle

Another way to earn more is to work a second job or run a small business alongside your employment. The online revolution means more people can sell and work online to generate an extra income.

Review your talents, interests, and experience and develop a second income stream to boost your savings.

8. Talk to Family

Most of your relatives are generous and buy you a gift for your birthday and Christmas. Instead of giving you more stuff, you can ask your relatives to contribute to your house deposit fund.

Alternatively, you can suggest that they buy you something that stops you from spending money – three months supply of your favorite coffee brand, for example.

You can divert the money you don’t spend thanks to their gift into your savings pot.

9. Holiday vs. House

A dream holiday gives you a couple of weeks of lovely memories, whereas a house lets you build a lifetime of them. If your goal is to buy a house and stop renting, you must prioritize the competing demands on your savings.

Your luxury holiday can wait – once you have flexed your saving muscles and ability to work towards a goal, you will afford a better vacation, maybe even a holiday home you can rent out to other people.

You can still go on holiday while saving, but get creative and find a way to get away for less.

10. Car vs. House

A new car with all the toys and extras can cost as much as a house. Plus, a brand new vehicle loses you money as soon as you get behind the wheel.

On the other hand, a house will probably give you a return on your money and potentially a profit. Consider buying a used car to reduce your capital outlay while you work towards amassing your house deposit.

Alternatively, if you don’t need a vehicle for work, consider not owning a car and using public transport. You can hire a car for holidays and long trips without the expense of a year’s maintenance, running cost, and insurance.

11. Hobbies vs. House

Some hobbies are horrendously expensive to maintain.

Enjoying a hobby is excellent for your mental health, but you need to consider all expenditures in terms of necessity and value when you need to save a substantial amount in a short time frame.

How much does your hobby cost you per month to enjoy?

Depending on your hobby, you may have a stash of materials to use up, cheaper ways to indulge, or an opportunity to convert your hobby into a profitable side-hustle.

Be practical and realistic when you evaluate your hobby vs. house deposit options.

12. Clean Your Credit Score

A bank’s willingness to give you a mortgage depends on your credit score.

While you are saving, get hold of your credit score and take action to ensure it is both clean and healthy. Part of that action is reducing or eliminating your credit card debt.

Financially, it makes more sense to pay off your credit card debt before saving if your debt’s interest rate exceeds the interest rate on your savings.

You may need to change your SMART goals to clearing your debts before saving your capital.

13. Research the Housing Market

You are not looking for a house yet, but while you are building your capital, get started on researching the housing market:

  • What houses are affordable for you – build a portfolio of details and areas.
  • How do prices change – watch how the costs of your target houses vary.
  • What areas are desirable, and what is up and coming.
  • Check out planning applications for future developments.

Researching your housing market while saving your deposit means that you know what level of price you expect to pay, the house standard, and the best locations for you when you are ready to buy.

Additionally, review the questions you need to ask when buying a house or an apartment. They give you pointers on what to pay attention to.

14. Research Financing Options

It is worth finding out about standard finance and government incentives.

Depending on where you live, you may benefit from help to buy, special saving rates for money ring-fenced as a housing deposit, and low-cost housing for key workers or first-time buyers.

These schemes come and go, but if a suitable option is available in your area, it can get you on the housing market faster than the traditional saving for a deposit route.

15. Talk to Your Relatives

There is a rising trend of parents and grandparents helping to get the next generation onto the housing ladder.

You can also put in legal protections by giving your parents a part share of your house until you repay them, and in some mortgage arrangements, they don’t part with any cash but act as guarantors for the loan.

As an independent adult, you may not want to approach your parents, but realistically if you are going to accelerate your timescale for homeownership, they may be happy to help.

16. Buy in Partnership

If you have people you are happy to share a rental property with, consider if you would be better buying a property together.

Naturally, it would be best if you had a legal and witnessed arrangement to protect all partners but consider the option of a group of two or four adults buying a fixer-upper to make a profit.

You all get somewhere to live, and on an agreed timescale, you flip the property and move on with a boost to your savings pot for independent homeownership.

The 8 Factors That Affect House-Buying Timing

You’ve got your home-buying fund in place; you have a clear picture of what you want and can afford, and you are ready to enter the housing market.

Is there a better time to buy a house?

The following 8 factors play a part, and your decision will typically rely on a combination of them.

Seasonal Price Differences

Is there a season for home buying?

Human nature seeks new challenges and changes in spring, and early summer is when buyers flood the market, and sellers can expect some healthy competition for their house.

As a buyer, you want to be looking at houses when fewer buyers are competing with you. Sellers are more likely to reduce their prices in the hope of getting a sale if they have fewer prospects.

The best time to buy a house is late fall – homebuyers drop out of the market as they get busy with kids going back to school and preparing for the winter holiday season.

When are houses most expensive?

Houses sell faster in hot summer months like June, and you pay a premium of around 1-2%, which can be several thousand dollars.

If your budget is tight, looking for your dream home in the cooler months can save you enough money to pay your legal fees.

Pick Your Day

If you want the absolute best discount, buy your house on the 26th of December. For obvious reasons, there aren’t many people looking to buy a house on that day. As a general rule, Monday (closely followed by Friday) is your best day of the week to get a discount on your house purchase.

The Monday effect shows up in booking holidays, flights, and online shopping.

Who knows why the Monday effect exists?

Who cares?

You can get a discount on a Monday, and it works in your favor as a buyer. If every dollar matters, Monday is your best day.

Increase Your Options

Although winter and fall are cheaper months for buying a house, they also see less availability.

Most sellers talk to their estate agent and opt to put their home on the market to attract the most buyers.

Most houses come onto the market in spring and summer, and by the time you reach fall, you see the homes most people did not want.

That is a sweeping generalization because some people need to list their houses in autumn or winter for personal reasons.

Most sellers wait for spring and summer, and if you have plenty of choices, that is your best time.

Local Trends

The housing market is vast and location-dependent. It is always worth asking your estate agent when the best times for buying and selling houses are in your area.

Local factors may mean some months are better for buyers and others are better for sellers that are different from the average.

New Housing Developments

A glut of new houses on the market may depress the process of older homes or give you room to negotiate a lower price.

Alternatively, the developers may be keen to get their first or last buyer through the door and give you a better deal.

Lower Interest Rates

Mortgage and loan interest rates fluctuate depending on economic circumstances.

Signing up for a mortgage when the interest rates are low makes your monthly payments more affordable and gives you the option to pay off more capital and reduce the length of the mortgage.

Tax Incentives

Occasionally governments try to boost the housing market or their election prospects by throwing incentives to buy at house buyers.

These incentives operate for a short period and may influence your decision when to buy your house.

Personal Factors

Your personal factor may dictate the best time for you to buy a house rather than fluctuations due to seasons and timing.

If you know you intend to move jobs in the next six months, it is worth getting your house purchase completed now as you need to show stable employment for a mortgage.

You may have a busy year coming with little time for house hunting or need to move before the kids start school.

Many factors may dictate when you need to buy a house. Ultimately, the best time to buy a home is when you can afford it and are ready to settle down.


Homeownership offers the prospect of building wealth for yourself and your family.

It provides you with tax-efficient capital investment and a secure place to live, and most people aspire to buy a house instead of renting as an investment for their future comfort.