It can be hard to save for a house while still managing your daily budget and social life. Inflation, an uneasy economy and job market, and the high cost of homes are all factors that affect would-be home buyers.
The median age of a first-time home buyer in 2025 was 40 years old, and in a 2025 Redfin survey, one in five millennial and Gen Z renters reported being unable to save for a down payment on a house. Why? The reasons vary widely, from experiencing job loss or insecurity to mortgage rates that are too high to afford. These generational cohorts also have a reputation for valuing travel, shareable experiences and living in the moment. So, what if you want to do both: save for a home and enjoy your life? No matter your age, it’s possible to “live your best life” and save for a house as well.
Below, we examine some of the best ways to save for a home while enjoying the moment. It all starts with creating a financial plan that fits your lifestyle.
Key Takeaways:
- You can balance saving for a future home and living in the moment, but you need a financial plan that will support both.
- Automating your savings, lowering or getting rid of debt and setting up a budget with room for spending and savings can help you strike a good balance.
- There are many ways to “live your best life” while budgeting for a home, from taking advantage of free events to dining in with your friends.
- It can take time to save for a down payment, but you don’t necessarily need to save 20% of the purchase price, which could mean a shorter timeline for achieving your goals.
How To Balance An Affordable Path Toward Home Ownership
Before you start a savings plan for buying a house, first decide where you want to live and what kind of home you dream of owning one day. Do you want an apartment in a city, a rural fixer-upper surrounded by farmland or a walkable neighborhood filled with affordable single-family homes? Understanding what’s most important to you will determine how much you need to save.
Thanks to online real estate websites, exploring your options has never been easier. Researching homes that appeal to you is a good way to learn about local housing markets and home costs. Just enter your desired ZIP code and start scrolling.
How Much House Can I Afford?
Once you determine where you want to live and the type of home you want, the next step is to understand what you can afford. Using an online home affordability calculator will give you a realistic idea of what kind of income and savings (or future savings) you need to buy a home, as well as what sort of down payment you can reasonably afford.
Pro tip: According to Freddie Mac, you can estimate your approximate affordable price range for a home by multiplying your annual gross income by 2.5. This number will give you a rough idea of what you could possibly afford, but keep in mind your individual circumstances.
Also consider what’s important to your lifestyle. For example, research from the National Association of Home Builders found that 52% of millennial buyers would prefer a smaller home if it had higher-end amenities and features over a larger one without them. And a large portion of Gen Z buyers say they would consider buying a home to share with friends or family, or purchasing a fixer-upper for a lower price, just to get onto the ladder of homeownership.
Listing the compromises you are willing to make when it comes time to buy a home can help you create a budget for saving for one. It’s important to purchase only what you can afford because you also will want to have the financial freedom to enjoy everyday life.
How Much Down Payment Do I Need?
After you have an idea of how much you need to save, explore various mortgage options to find programs you will qualify for, keeping in mind different options mean you’ll need to save more or less than others. In most cases, unless you plan to pay all cash, you should focus on saving enough money to cover closing costs and the down payment. The downpayment will usually range from 0% to 20%. Closing costs are usually around 3% – 6% of the purchase price, but some lenders will allow you to wrap them into the mortgage. However, rolling these costs into the loan will add to the borrowing costs in the form of a higher monthly payment.
Don’t let the thought of saving for a down payment as high as 20% scare you off: Not all mortgages call for that much. In fact, in 2025, the median down payment from first-time homebuyers was 10%, according to the National Association of Realtors (NAR). And you may be able to put down even less.
Compare the various home mortgage loan types to explore your options and get a better understanding of how much money you may need to save for a down payment. For example, depending on your credit score, you may only need 3.5% with an FHA loan, or 3% with a conventional mortgage. If you qualify for a VA- or USDA-backed loan, no down payment is required at all. However, do keep in mind if you take out a conventional loan with a down payment that’s less than 20%, you’ll have the additional cost of paying for private mortgage insurance (PMI).
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How To Save Money For A Home
Saving up for a home often can be challenging for first-time buyers without a high income, significant savings or a family member willing to help them. Here are some ways to maximize your savings potential and be prepared when it’s time to buy a home.
Pay Down Your Debt
If possible, plan on paying down any high-interest debts before you start saving for a home. Why? High-interest debt eats into your paychecks and can potentially lower your credit score. Lenders will evaluate your debt-to-income ratio (DTI) when they consider your loan application. The lower your ratio (and the higher your credit score), the more attractive you’ll look as a borrower.
Create A Timeline
It can take years to save up for a down payment on a home. Creating a reasonable savings timeline can help you keep your goals on track and yourself motivated to reach them.
Automate Your Savings
If you’re serious about saving for a home, instead of using your everyday checking or savings account, consider opening a high-yield savings account, a certificate of deposit (CD) or another interest-earning account. This can help you grow the savings for your down payment faster without being tempted to spend the money.
Automate a percentage of each paycheck to be deposited directly into this account. Or if you are a freelancer or gig worker, automate a regular monthly transfer from your everyday checking account. By doing so, you “set it and forget it,” which makes it easier to save over time.
Downsize Your Current Living Situation
If you’re trying to save for a home but don’t want to give up the things you enjoy – like dining out, entertainment or travel – think about downsizing your current living arrangement. Spending less on rent could free up money to both enjoy your lifestyle now and save for your future. You may need to consider lowering your housing costs in particular if your rent is costing more than 30% of your monthly income, you’re living paycheck to paycheck or you have to use credit cards to support your lifestyle.
Taking on a roommate, renting out a room in your home or temporarily moving in with family may help offset expenses, making it easier to balance living in the moment and saving for a down payment.
Learn About Down Payment Assistance Plans And Housing Grants
Research down payment assistance programs and housing grants. These opportunities, usually offered by your state’s housing finance authority, can help eligible would-be buyers afford their first home and are specifically designed to reduce your required down payment and minimize closing costs.
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Cost-Effective Ways To Live In The Moment
Living in the moment usually means focusing on the present, pursuing spontaneous adventures and prioritizing experiences over material possessions. Yet it is possible to enjoy the present while also saving for a future home, with some trade-offs.
Discover Free Or Lower-Cost Activities and Entertainment
If you’re trying to save money, there are loads of things to do that cost nothing to enjoy. Consider attending free outdoor events, hiking in state parks, cooking at home instead of eating out or ordering takeout, and shifting from spontaneous travel to planned, budgeted holidays. These small changes can help increase your savings while keeping your social life active, because when you spend regularly on things like coffee or restaurant meals, the costs can add up over time.
For example, choosing to pack a lunch instead of spending $10 on lunch every workday can save $200 per month, or $2,400 per year. If you also order takeout twice a week at $30 per order, that adds up to approximately $3,120 annually. If you ditched the recurring lunch and takeout by cooking at home, you could save $5,520 in a year— enough for a 5% down payment on a $110,000 home.
Take Advantage Of Credit Card Points And Rewards
As long as you are able to keep your credit card spending in check, taking advantage of rewards many credit cards offer is one way to save on dining out, travel and shopping. Carefully research credit cards that offer the most perks to earn a percentage on your purchases to receive cash back, points and miles. Just be sure to pay off the balance every month, so you aren’t charged interest.
Most lenders want to see a credit score of at least 620 or higher to qualify for a traditional mortgage. If you decide on using a government-backed loan, a lower score may suffice, but a strong credit profile will always be a benefit when it’s time to buy a home.
Shop Sales
If you love shopping, you don’t have to stop when saving for a home. Simply shop smarter by planning ahead. Create wishlists and budgets, research prices to make sure you are getting the best deal and sign up for newsletters or alerts to be notified when an item you’ve had your eye on goes on sale. Watch for end-of-season or holiday sales, and avoid shipping fees by shopping in person. Consider buying clothing, furniture and home goods from consignment and thrift shops. You’ll save money and still enjoy the hunt for a good find.
Earn Extra Income
If you have the time, energy and a particular skill set, a part-time job or side gig – from pet sitting to working in your local bookstore – or picking up extra hours at your regular job can help you earn, and thereby save, more.
Travel Off-Season
Love to travel? It doesn’t have to end just because you’re saving for a home. A little planning can go a long way. Traveling during off-season times can save you a lot of money on activities, lodging and flights. For example, it’s often cheaper to visit Europe in the off-season, such as in late fall or early spring, than in the summer. If you can’t afford to fly, road trips also can be a fun way to explore. It’s all about shifting your mindset from spontaneous to planning ahead.
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How To Create A Budget To Buy A Home
When you are trying to balance saving for a home and living in the moment, your budget should have room for your long-term savings goals (including buying a home), as well as some guilt-free spending money.
Assess Your Financial Situation
Writing down what you earn versus what you owe is a good way to understand your finances. Knowing where your money goes each month can help you build a stronger budget overall and help you decide where and how to spend or save your money going forward to achieve your goals.
- Start with your net income, the amount that you take home after taxes. This is the pot of money you use every month to pay for your life.
- Next, itemize your recurring expenses, like rent, car payments, basic groceries, utilities and other non-negotiable bills.
- Then, write down your discretionary and flexible common expenses, such as gym memberships or exercise classes, dining out, entertainment and travel.
- Review both sets of expenses and think about ways you can cut back on spending, such as canceling an expensive and little-used gym membership or taking on a roommate to lower rental costs.
- Consider using a common budgeting formula like the 50/30/20 plan to keep it simple.
A Way To Save: The 50/30/20 Budgeting Rule
This plan breaks down your spending into three categories: needs, wants and savings – all of which are subtracted from your monthly net income.
- Needs: 50% or less of your income goes to non-negotiable items, like housing, food, utilities, insurance, medical bills and minimum debt payments.
- Wants: 30% of your income is spent on things you want, like travel, gym memberships, entertainment, dining out, new clothing and other discretionary spending that make life enjoyable and easier.
- Savings: 20% of your income should go to investing for retirement, creating an emergency fund, saving for a down payment on a home, and paying down high-interest loans or large amounts of debt, like credit cards or student loans.
If you are saving for a home while still trying to enjoy the here-and-now, consider making minor adjustments in each category. Temporarily spending less on non-essentials or reducing variable expenses can give your savings an extra boost without making you feel deprived. Even if you cut back for only a short period of time, what matters is making consistent contributions toward your savings goal.
Make A ‘Fun Fund’ For Living In The Moment
If you prioritize living in the moment, budgeting a specific monthly amount for “fun” may be a good idea. Once you figure out an amount you want to set aside, consider creating a “fun fund” checking account linked to Apple Pay or a similar payment app that allows for easy, guilt-free payments with the tap of your phone.
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FAQ
While it is impossible to know exactly how much money you’ll need when the time comes to buy, try looking at how much homes cost in your desired area, and use those prices as a guideline for saving.
The Bottom Line: You Can Save For A Home Without Sacrificing Your Quality of Life
You don’t have to give up on your everyday happiness to save for a home. It’s possible to strike a balance between the future and the present. By creating a realistic timeline, researching the local housing market, having a strong financial plan, automating your savings and setting aside some funds in your budget for fun, you can make steady progress toward your goal of homeownership.
Ben Shapiro
Ben Shapiro is an award-winning financial analyst with nearly a decade of experience working in corporate finance in big banks, small-to-medium-size businesses, and mortgage finance. His expertise includes strategic application of macroeconomic analysis, financial data analysis, financial forecasting and strategic scenario planning. For the past four years, he has focused on the mortgage industry, applying economics to forecasting and strategic decision-making at Quicken Loans. Ben earned a bachelor’s degree in business with a minor in economics from California State University, Northridge, graduating cum laude and with honors. He also served as an officer in an allied military for five years, responsible for the welfare of 300 soldiers and eight direct reports before age 25.
