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How to Save for a House While Renting

Last updated 03/15/2024 by

Erin Gobler

Edited by

Fact checked by

You can save money for a house, even while renting, by increasing your income or decreasing your spending. Saving for a house is more difficult when a large portion of your budget is going toward rent, but that doesn’t mean it’s impossible. Among other things, you can get a separate savings account, pay off your other debts, or get a side job to bring in extra cash.
Buying a home can seem like an unattainable dream when you’re renting, especially if you’re in a seller’s market with increasing prices and a short supply of homes. The good news is that with just a few tweaks to your finances, you can pay your rent while still setting aside enough money each month to save up to buy your own home.

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How much should you save to buy a home?

One of the biggest questions people have when they’re considering buying a home is how much they’ll need to save. The answer to that question depends on several factors, including the price of the home you plan to buy.
Generally speaking, the more expensive the home you want to buy, the more you should save. That’s because other expenses, including your down payment and closing costs, are often based on a percentage of your home’s value.
  • Down payment. Traditional advice says you should have a down payment of 20% to buy a home. Of course, there are some advantages to a larger down payment. A 20% down payment means you won’t have to pay PMI (short for private mortgage insurance). In fact, you only need a 3% down payment to qualify for a conventional loan.
  • Closing costs. Another thing to consider is your closing costs, which include lender fees, title company fees, and other third-party fees. Generally speaking, closing costs range from 3% to 6% of your home price.
  • Furnishings. Finally, consider saving a bit extra for any furnishings you’ll need to buy for your home. This extra money can also cover any unexpected maintenance costs that may come up during your first months of home ownership.

How to save for a house while renting

Are you planning to start the home buying process in the next few years? Here are some ways you can set aside money for your down payment savings, even when a large part of your budget is going toward rent.

1. Create a budget

This may be everyone’s least favorite piece of financial advice, but it’s also one of the most practical. When you don’t have a budget, you don’t know where your money is going. And when you don’t know where your money is going, it’s impossible to know where to cut back.
The first step to creating a budget is calculating your monthly income, as well as your typical monthly spending. From there, you can set spending goals for how much you’d like to spend in various parts of your budget.

Pro Tip

Once you’ve created your budget, make sure to track your expenses going forward so you know whether you’re on track. If you aren’t sticking to your budget, you can make adjustments before it’s too late. Try using one of the money management tools listed below.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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2. Figure out where you can cut back

When it comes to saving money, there are essentially two options: reduce your spending and increase your income. We’ll get to the second option later on, but for now, let’s talk about reducing your spending to save money.
Chances are that all of us have a place in our budget where we can cut back, whether permanently or temporarily. You can look at small areas to save, such as your dining out budget or spending on entertainment. But you can also find bigger areas to save, like your car insurance, cell phone bill, and other monthly bills.

3. Open a separate savings account

Saving in your normal checking or savings account can be difficult. Not only is it easy to use that money for day-to-day spending, but it could also result in using it as an emergency fund or sorts for unplanned expenses that come up.
Instead, open a separate savings account that’s just for your house savings or a down payment fund. One savings account may have a higher interest rate than another, so be sure to compare all your potential choices before deciding.

Pro Tip

Not sure where to open a savings account? Take a look at the savings accounts listed below to find the best option for your specific financial situation.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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4. Save money on rent

Rent eats up a large portion of many people’s budgets, making it difficult to find extra money to save for a house. As a result, an easy way to save is to reduce the amount you spend on rent.
One way to save on rent is to move to a place where rent is cheaper. If you’re planning to move in the near future, this strategy may not be effective since the cost of moving could outweigh any savings. But if it will take you a couple of years to save for a house, moving could be a helpful way to make extra room in your budget.
Another way to save on rent is to get a roommate, whether it’s inviting someone to move into your current home with you or moving into a new home with a roommate.
Paying the rent with a credit card may seem like an unusual choice, but it can offer several benefits to renters who are looking to maximize their rewards and earn cash back or other perks. Here is our list of the best credit cards for paying rent every month

5. Pay off debt

If you have other debt you’re working to pay off, it reduces the amount you have available for your down payment savings. As a result, you might find saving easier if you pay off your other debt first. This step is especially important if you have high-interest credit card debt that’s accruing a large amount of interest each month.
Of course, paying off debt has an added benefit for when you’re actually ready to buy a home. Your debt-to-income ratio (DTI) — meaning the percentage of your income that goes toward debt — is an important factor in determining the size of mortgage you qualify for. Reducing your debt and your DTI can help increase how much house you can afford.

6. Save your windfalls

Most of us have windfalls that come up throughout the year. Rather than spending all the money from those windfalls, you can use them strategically to boost your house savings. Windfalls you might get include:
  • Tax refund
  • Large gifts
  • Extra paychecks (if you’re paid biweekly, there will be two months per year where you get three paychecks instead of two)

7. Pay yourself first

A popular strategy in the personal finance world is paying yourself first. Rather than saving what’s left after spending for the month, paying yourself first is when you spend what’s left after saving.
The best way to pay yourself first is to set up an automatic transfer from your checking account to your savings account right after you get paid each month. When you use this strategy, you don’t give yourself the chance to spend that money on something else or the chance to talk yourself out of saving.
If you’re looking to use this feature, you can compare the checking accounts below, each of which offers automatic transfers.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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8. Increase your income

We’ve talked about how reducing your spending is one of the best ways to save money. But the other way to save is to increase your income. You can continue spending on the things you enjoy while still having room in your budget for saving.
There are plenty of opportunities when it comes to increasing your income. First, consider whether you can increase your income in your current line of work, either by asking for a pay raise or switching to a higher-paying job.
You can also increase your income, even if only temporarily, by picking up a side hustle. With a side hustle, you can work extra hours when you have time. With the rise in popularity of gig apps, there are more opportunities than ever to earn extra cash.

9. Apply for down payment assistance

There are plenty of down payment and first-time homebuyer assistance programs to help reduce the cost burden of buying your first home. Some of these programs come in the form of loans, which you’ll eventually have to repay. But others are grants, meaning they’re entirely free money that you won’t have to repay.

Pro Tip

Each state has its own homebuyer and down payment assistance programs. The Department of Housing and Urban Development has a comprehensive list of the programs available in each state.


How much money should I have saved before getting a house?

The amount you should save before buying a house depends on the price of the home you’re buying. Generally speaking, you should save at least 10% of the sale price. This will help you pay for your down payment, closing costs, and other costs of buying a home. If you’re planning for a large down payment, you should save even more money. However, that can be unrealistic in some cases. You may be able to buy a house with a 3% down payment (or even less) if you qualify for special programs, such as FHA or VA loans.

Can you save money by renting?

You might be surprised to learn it’s far easier to save money by renting than it is by owning a home. While you may not be building equity in your home, you also aren’t subject to costs like interest, property taxes, and maintenance since your landlord is responsible for those.

How can I save money monthly while renting?

Just because you’re paying rent doesn’t mean you can’t also save money for a future home. The two best ways to save money while renting are to get on a budget to reduce your monthly spending and to increase your income.

Key Takeaways

  • When you’re saving for a home, you should plan to save at least 3% for your down payment, 3% to 6% for closing costs, and a bit extra for furnishings and maintenance.
  • You can save for a house while renting by cutting back your spending, including reducing your rental costs and finding other places in your budget to save.
  • You can also save money for a home by increasing your income, either by switching to a higher-paying job or simply picking up a temporary side hustle.
  • There are plenty of homebuyer assistance programs available, especially for those buying their first homes.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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Erin Gobler

Erin Gobler is a Wisconsin-based personal finance writer with experience writing about mortgages, investing, taxes, personal loans, and insurance. Her work has been published in major outlets, such as SuperMoney, Fox Business, and

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