7 Simple Tips to Start Your House Fund

Lauren Wellbank
Written by Lauren Wellbank
Updated January 12, 2022
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Jump-start your nest egg savings

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Saving up enough money to buy a home is possible on any budget. You may have questions about how much to set aside each month, or whether you can buy a house without a down payment. But the good news is this—as long as you’re saving, you’re a step ahead of the game. 

With these simple steps, you can start a house fund and be well on your way to homeownership. 

1. Create a Budget

It's hard to know exactly how much money you have to set aside without first looking at what you're spending (and earning) each month. You can create a budget to track your monthly spending using pen and paper or get a little more high-tech and use an excel spreadsheet. It doesn't matter how you track your expenses and income as long as you're able to document all of the money coming and going from your bank account each month.

2. Cut the Extras

Once you know what you're spending every month, it will be a bit easier to see where you can make some cuts. For example, if you're ready to buy a house soon, you may want to nix that daily latte or weekend happy hour. However, if you're still a ways away from homeownership, you may want to consider what debts you can pay down (or pay off). You should also explore whether you can save money by refinancing your auto loans or an existing mortgage.

3. Do the Math

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Photo: Marko Geber / DigitalVision / Getty Images

After you've cut the fat (and the non-fat latte) from your budget, it's time to see how much you can comfortably set aside each month. A good rule of thumb to follow is the 20/50/30 theory. It recommends you put 20% of your monthly income directly into your savings, set aside 50% for necessities like food and housing, and leave 30% for whatever expenses might pop up. 

If that type of budget isn't feasible for you, it may be time to take a deeper look at your spending (and maybe even ask for a raise).

4. Start a Savings Account

The best way to save is by putting your money to work. High-yield savings accounts are a perfect place to stash your cash while growing your nest egg. They offer the safety that can’t be found in some riskier ventures like the stock market while giving you accessibility to your money when you need it. Plus, you’ll make more money with every dollar you add to your account.

5. Don’t Forget your Debt

Just because you’ve started saving for a home doesn’t mean that you should stop trying to pay off your existing debts. Maintaining a good payment history on your loans and credit cards can even help you save money in the long run by increasing your credit score. A better credit rating may help you land a lower interest mortgage rate, which means you’ll have more buying power when it comes time to purchase your home. 

6. Automate Your Transfers

Setting up a house fund won't do you any good if you forget to fill it, which is why we suggest automating your transfers. Set up your bank account so that it will make weekly (or monthly) transfers into your account. 

7. Don’t Touch It

If you want to use this money to buy a new home, you shouldn't use it for other expenses. Sure, emergencies may arise that require you to dip into your savings. You shouldn't touch this money for non-essential purchases— but if you want to save for another big-ticket item or create an emergency fund, these tips will work for that too.

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