Home Buying

How to Save for Your First Home: 5 Simple Steps

January 28, 2022

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Figuring out how to save for your first home might feel next to impossible.

All you can see are dollar signs which leaves you feeling overwhelmed.

The good news is you might not need to save as much money as you thought. 

One of the BIGGEST myths we find first time home buyers believing is the amount of money they have to put down.

Spoiler Alert: You don’t *HAVE TO* put 20% down to buy your first home. Do we hear a sigh of relief on the other side of the screen?

You can get your finances figured out by talking with a local lender. Start by contacting us, and we’ll connect you with the best, most reliable local lenders in Madison!

No matter what, it’s a good idea to start saving for your first home – if you don’t need extra funds for a down payment, you’ll want some set aside for an emergency fund, home repairs or updates, or decor. 

We’re sharing 5 easy ways to save for your home ownership goals!

#1 It’s as simple as thinking about your dreams. Start by picking your savings goal.

  • Overall Homeownership
  • Homeowner Emergency Fund
  • Down Payment
  • Renovations
  • Other

#2 Analyze your spending habits 

Look at and analyze your last 30 days of spending. Highlight unnecessary expenses and determine what you can eliminate.

You can print off your bank & credit card statements & go through them with an actual highlighter when you see something you didn’t need to buy or an “extra” expense. Or you can do it digitally and create a Google Sheet list of those specific items and what they added up to.

This will give you a good glimpse into where your money is going that wasn’t necessarily planned, and can help you eliminate similar expenses going forward. You can instead funnel that money into savings for whatever your Step 1 goal was (NEW HOME!?).

#3 Check your credit score

This is especially important if you’re saving for a home. Your credit score will impact what type of loan you can get approved for, how much you have to put down, the interest rate you’ll lock in for your mortgage, and how much house you can afford to purchase based on your debt to income ratio.

After learning your current credit score, you can make a plan to increase that number and / or pay down debt that is contributing to that score. 

Bonus Tip: Set yourself up with an account like EXPERIAN to protect your credit score and keep close tabs on it!

#4 Track your spending

Now that we’ve analyzed our previous spending habits and checked our credit scores (and debt amounts), it’s time to track future spending. 

Set up a Google Doc or start a note in your notes app and start tracking your spending. Do this for 30 days so you can become hyper aware of what you’re spending money on, on the go. 

Grabbing that extra latte every day or ordering from your favorite online boutique a few times a month could be adding up to way more than you realized. When you have to write it down in the moment, it will become a lot more evident as to what is adding up fast that is preventing you from saving for what it is you really want!

#5 Automate It!

Remember WHY you made this savings goal. The WHY behind buying your first house.

To host family gatherings and sit around the table playing card games, to finally get a black lab and play fetch in your own backyard, to start a family and raise your babies in a place of your own (and paint the nursery pink)! 

Keep that WHY close. Write it on a sticky note and stick it on your desk or bathroom mirror – wherever you’ll see it daily.

In addition, we have a simple way to make sure your money saving goal sticks: make it automatic!

Setting up automatic savings is like built-in accountability because it forces you to save a specific amount of money without having to think about it. 

Treat it like a monthly expense or bill and you’ll be able to start seeing traction quickly!

Thinking about buying your first home? It’s more doable than you might think! Our team guides you through the home buying process from start to finish. We can connect you with the best local lenders in Madison, and also walk you through downpayment assistance options for first-time home buyers! Send us a message and we’ll connect to learn about your goals!

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We're Dominic and Ellie, founders of The 608 Team.

We met at a real estate training after being introduced by a mutual coworker (who's now one of our 608 team members!). In our love story are the roots of what is now Madison's most comprehensive real estate boutique.

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