Posted
on Thursday, May 1, 2025
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Financial Education
A Guide to Saving for a Home Purchase
Purchasing a home is one of life’s biggest milestones—but it can feel stressful, no matter where you are in your life journey. The thought of saving for a house may seem overwhelming at first, especially when you consider the costs involved. However, once you take the first steps and break it down into manageable goals, the process becomes more achievable than you might expect.
Homeownership is a meaningful investment in your future. And with a clear plan, discipline, and the right financial strategy, it’s still well within reach—even in today’s competitive market.
Set a goal
As you begin exploring the idea of homeownership, one of the first steps is to establish a realistic and affordable price range for your search. Key homebuying expenses—such as your down payment and closing costs—are typically calculated as a percentage of the purchase price. By identifying a target home price early on, you can set a clear and achievable savings goal.
Before diving in, take time to assess your overall financial readiness. Consider your current savings, outstanding debts, and credit history. These factors play a crucial role in determining your loan eligibility, potential interest rate, and how much you’ll need to contribute upfront.
The larger your down payment, the lower your monthly mortgage and the more equity you’ll build upfront. While 20% isn’t required, it can help you avoid private mortgage insurance and may lower your interest rate. Be sure to budget for closing costs, moving expenses, furnishings, and unexpected costs by setting aside extra cash.
Calculate your savings goal by estimating the down payment, closing costs, and extra cash needed for move-in expenses.
Tighten your budget and save any extra cash
To reach your savings goal, start with a clear plan and look for ways to cut unnecessary expenses. Shop around for better rates on car or health insurance, and consider switching to more affordable internet or phone plans. You may also save by refinancing student or auto loans to reduce monthly payments. Don’t forget to cancel unused subscriptions.
When you receive unexpected income—like a gift or bonus—resist the urge to spend it and add it to your savings instead.
Keep your savings in a separate account
To make the most of your savings, consider placing your funds in an interest-bearing account. Look for accounts with competitive annual percentage yields (APY)—the higher the APY, the faster your money can grow. High-yield savings accounts, money market accounts, and certificates of deposit are all solid options. Visit Boone Bank & Trust Co. to explore which solution best fits your needs.
While saving for a home can seem challenging, small, consistent steps can lead to big results. At Boone Bank & Trust Co., we’re here to support you on your journey to homeownership.
More information
For more information, stop by a Boone Bank & Trust Co. location near you to discuss how we can help you save to achieve your goal of homeownership!
These tips are provided by the Iowa Bankers Association