Trustpilot Trophy
America's #1 Debt Relief Company
Get a free debt consultation

One of the biggest financial decisions you could make in your lifetime is buying a house. So how much money should you save before buying? Read on to learn more about how much money you should have in savings before buying a house, what steps to take if you want to buy, how to pay for a house and alternatives to purchasing.

Costs Associated with Buying a House

When you’re planning on buying a house, it’s important to be aware of all the additional costs associated with it. Forgetting to take these into account could put you in for a surprise on closing day. It’s also important to realize that many of these costs can be a part of the negotiation process, so be sure to talk to your real estate agent and check your contract to identify which costs you are responsible for.

Down Payment

The obvious cost when you buy a house is the down payment. However, how much you should put down can vary depending on the lender. For example, if your credit score isn’t great then you might need to put more than 20% of the house’s value as a down payment in order to qualify for financing.

Closing Costs

Closing costs are the fees that you pay when you close on your house. These can vary widely depending on how much money is changing hands in regards to your house, and can be negotiated in the contract, so be sure to ask your real estate agent how much you should expect to pay.

Property Taxes

When buying a house, the seller will typically pay a prorated amount for property taxes to the buyer. However, this means that the buyer is on the hook for the total property tax bill when the end of the year comes. This can be a huge expense for many buyers and varies depending on what city, county, or state you live in. It’s also possible to roll your property taxes into your mortgage, which makes it easier to manage the additional expense on a monthly basis, instead of paying a large lump sum once or twice a year.

Homeowners and Mortgage Insurance

Homeowners insurance is meant to protect your home and the contents within it. It is typically a mandatory step for homeowners to take out this type of insurance policy, however there are some instances where it may not be required.

Mortgage insurance is a type of insurance that is paid for by the buyer and typically protects the lender rather than protecting the homeowner. The bank could require mortgage insurance as a way to protect their investment should something happen to you, such as an injury or disability preventing you from working. Private mortgage insurance is also typically required for home buyers paying less than 20% down as a way for the banks to help ensure the loan will be paid, and will result in an overall increase in the loan amount.

Homeowners Association (HOA) Fees

Depending on the neighborhood, you may be responsible for homeowners association (HOA) fees that will help cover certain items like landscaping, snow removal, and parking in the neighborhood. These fees typically vary by neighborhood and are often subject to change based on how much is needed for upkeep or how many people live in your community, so it’s important to be aware of what these costs may look like before you buy a house.

Moving Costs

While the excitement of getting a new house is a great feeling, it’s important to make sure you have enough money saved up to cover the costs of moving. It’s important that you have a good amount of cash set aside before buying your house so that you’re not caught off guard when it comes time to move. Moving costs can vary depending on how much stuff you have (quantity, size, weight), how far you’re moving, and how long it will take them to move everything from one house to another. It is also possible to have movers pack for you if you’re looking to save time, but this will cost extra money.

Maintenance and Repairs

Most houses come with some type of needed repairs. It may be something as small as a few holes in the wall or something as major as a leaky roof. It’s important to take into account how much you will be spending every year on maintenance and repairs when considering how big of a house to get. Even if your home seems completely flawless or is brand new, there’s bound to be something that requires attention and repair over time. One way to combat these expenses is to negotiate with the seller to pay for a home warranty that can reduce how much you have to pay when these repairs come up.

What Steps Should I Take if I want to Buy a House?

If you want to buy a house we recommend you start by contacting  a lender who can help you get an idea of what your total cost will be. Once you have a ballpark of what you will spend, start putting money away. If you have a specific home in mind, we recommend getting preapproved for a mortgage so that you know how much to budget for your down payment as well.

If you plan to take out a loan versus paying cash for your home, it can also be a good idea to work on building your credit prior to starting the buying process. Having a better credit score could help you qualify for better terms on your mortgage loan and potentially keep you from paying mortgage insurance.

Ways to Pay for a House

There are several different ways to pay for a house. The most common way is to take out a mortgage which is a type of loan that will allow you to buy a house without having to pay for it in full upfront. With a mortgage you will make monthly payments to the lender that cover the principal of your loan and the interest.

For those with more funds saved up, it may be possible to pay for a house in full. This can be a good option because you don’t have to worry about making a payment each month and can also use this cash offer as a bargaining chip to get a lower price on the house. However, this is not something that is always possible to the average person who may not have that much saved up.

Alternatives to Buying a House

If you’re not quite ready to buy a house or need to work in building your savings for a down payment, you might consider alternative options. These solutions can be a great way to help buy you time until you are ready to purchase a house.


The main alternative to buying a house would be to rent one. This will allow you the benefits of extra space that a house provides, while also not forcing you to be tied down to a mortgage.

Buying Alternative Housing

There are other options than the typical house. Things like a townhouse or condo can still provide the benefits of extra space while also giving you more freedom to move around at the end of your lease.

So How Much Should I Save?

The answer to this can depend on a variety of factors, including how much you make, how much debt you have, and how much your desired house will cost. In 2019, the average down payment on a house or condo was 12%. This means that you should save at least 12% of the total purchase price and probably more to help pay the closing costs and other fees associated with buying a house. However, your lender can provide guidance on the exact amount you should save.

For tips on saving, check out this article – 10 Tips: How to Save For a House

How Can CreditAssociates Help? 

If your debt is keeping you from making the commitment to buying a house, let us help. Our certified debt consultants can provide a free, no-obligation debt evaluation and a plan to help you become debt-free for less than you owe. Contact us today to schedule a free consultation.

Common Questions About Buying a House: 

Can I Buy a House With Cash?

It is possible to buy a house with cash and can be something that is attractive to a seller as these offers will typically not rely on things like an appraisal or mortgage. However, the average person doesn’t usually have enough capital built up to be able to purchase a house outright.

Am I emotionally ready to buy a house?

If you’re considering whether you’re emotionally ready to buy a house or not, you should consider how much attachment you have to your current living situation. You may be ready if you’re feeling it’s time for a change or that this is the right step toward achieving your long-term financial goals.

Do I need to hire a real estate agent?

A real estate agent can be an excellent way to help you navigate the buying process. They will know how much houses are selling for in your area and can help you navigate the buying process. It is also common that the buyer will make no payments to the realtor as the realtor earns their money from the seller based on the final purchase price.