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Saving for a home can feel like trying to reach the top of a mountain, but with the right strategies, it’s more achievable than you might think! From setting clear goals to exploring savings account options, every step—no matter how small—can make a big difference over time. 

You’ve come to the right place for a step-by-step guide on how to save for a house for first-time homebuyers. This article provides practical tips and actionable advice to help you save for a down payment and turn that dream into a reality.

Step 1: Determine How Much You’ll Need for a Down Payment

The first step on how to save for a house: Research the average price of homes in your desired location. Think about must-have features for your home: How many bedrooms are you looking for? Does it need to be close to a certain school? You could also look at the average cost of constructing a new home or buying a new build. 

Talking to local real estate agents can also give you a better idea of the market. While putting down 20% of the home’s price is ideal in order to avoid paying private mortgage insurance (PMI), it may be more attainable to put down a smaller amount based on your timeline. In some cases, you can put down as little as 3%! But the more you can put down, the better. 

Check out this article to help you get a better idea of how much house you can afford.

Step 2: Identify the Best Home Loan Option for Your Needs

Explore home loan options and programs for first-time homebuyers as well as their requirements. A conventional fixed-rate home loan is ideal for steady payments, but other options may suit your needs better. Some other home loan types: a construction-to-permanent loan, an adjustable-rate home loan, an FHA loan, or a VA loan. 

SCCU also offers a No Down Payment Home Loan, a No Closing Costs Home Loan, an affordable housing program, and Hero Home Loan options that could potentially save you thousands of dollars. Check out all the home loans here. 

Feel free to get in touch with us for a consultation. 

Step 3: Set Your Savings Goal

Once you’ve looked into average home prices, home loan requirements, and your budget, it’s time to determine your monthly savings goal based on your timeline. 

For example: Let’s say you’re looking to save 3.5% for a $400,000 home over three years. To calculate this, multiply the percentage (as a decimal) by the home’s price and then divide by the number of months. So, 0.035 x $400,000 is $14,000 and divided by 36 months is $388.89. 

Keep in mind that it’s a good idea to pad your savings for additional costs that come with buying a new home (appliances, furniture, décor, repairs, etc.). 

Step 4: Open a Dedicated Savings Account for Your Down Payment

If you haven’t already, be sure to open a separate savings account with a high interest rate for your down payment. Be sure not to withdraw any funds from this account. It’s a good idea to set up automatic transfers from your checking account to this dedicated savings account. Here are some savings account options:

• Money Market Savings Account: This is a savings account with a higher interest rate to help give your funds a boost. While this account requires a higher opening balance and a minimum monthly balance, in most cases, you’ll earn more interest with a Money Market than with other types of savings accounts.
• SCCU Savings Cents: This is a round-up savings account, where every eligible debit card transaction will round up to the nearest dollar and deposit the difference into your savings. So, you’ll save while you spend! Plus, it offers a high interest rate. 
• Certificate of Deposit (CD): In addition to a savings account, you could apply to open a CD at SCCU⁶ (with a $500 deposit) to give your savings a boost! A CD locks in your funds until the term ends. Keep in mind that CDs don’t allow additional deposits, and a penalty fee may apply for early withdrawal. 

Step 5: Cut Out Unnecessary Expenses

Take a look at your bank statements and credit card statements from the last 12 months to see where you can cut back. For example, maybe you’re routinely spending money on subscriptions or memberships you never use. If you eat out often, consider making more meals or coffee at home and bring lunches to work. 

If you have a checking account that’s charging you monthly fees, it’s time to switch to a free checking account. And good news! SCCU offers Free Checking accounts with no monthly service fee and no monthly low-balance fee. 

Step 6: Shop Around to Lower Bills

Check with your utility providers (electric, Internet, sewer, water, trash) to see if they offer any options to lower your bills. Sometimes they offer discounts for setting up automatic payments. Score! Additionally, reach out to insurance providers for quotes to see if they can offer lower premiums. If you have multiple loan payments, look into refinancing or consolidating your loans at a lower interest rate. 

Step 7: Stash Any Extra Cash

Whenever any extra cash comes your way, such as bonuses, tax refunds, or gifts, add the funds to your savings account for your down payment! Plus, you can also redeem any cash back from your credit cards to add to your savings. Every little bit counts and can help get you closer to your goal faster. 

Why Choose Space Coast Credit Union?

There you have it! Now you know the steps on how to save for a house. Be sure to explore home loans that SCCU offers. We’re the third-largest credit union in Florida, with over 60 branches and 24/7 Online & Mobile Banking. As a credit union, we’re a not-for-profit institution that pools together the money from our members to promote savings and provide access to affordable loans. 

SCCU membership is open to relatives of current members and all who work or live in these counties with a $5 deposit in a Share Savings account. Learn more about the home-buying process on our Home Buying Center page. 

Ready to take the next step? Estimate your mortgage payment today!