How To Save For A House While Renting: A Simplified Guide

How to save money for a house while renting

Moving from renting to buying a home is a big step, and it can be intimidating. Not only should you begin thinking about what you want in a future home, but you should also examine your current finances and determine how to best begin saving for a house.
Whether you’ve been planning your home buying journey for a while or are just getting started, these tips are critical for anyone who wants to save to buy a house while renting.

How To Save for a House While Renting

#1. Set a lofty (but attainable) goal.

The first step in saving is determining how much you want to put aside for a down payment on a home. Include a down payment, closing costs, any additional fees, and mandatory inspections in your budget. Give yourself a firm deadline and an attainable goal, such as $6,000 in the next year. The obvious next step is to…

#2. Hold yourself responsible

Now that you’ve established a goal, it’s time to track your progress. Rather than keeping everything in the same checking account, keep your house money in a separate savings account. Set up your account to automatically transfer $200 from your checking account to your new house account each month, and you’ll likely never notice. That’s a savings of $2400 over the course of a year!

#3. Reduce your subscriptions

Netflix, Amazon Prime, and your gym membership are all options. You’re probably paying for subscriptions you don’t use enough. There are numerous free or low-cost apps available (Mint, Goodbudget, PocketGuard) that you can use to keep track of the subscriptions and memberships you pay for each month. If you don’t feel like you’re getting your money’s worth, it’s time to eliminate them from your budget.

#4. Establish a down payment savings account.

Once you’ve decided on a down payment amount, Cruz recommends opening a savings account to “help you keep track of how much you’re saving and your progress.” Otherwise, you may be tempted to use your down payment fund to cover recurring, or even unneeded, expenses.

Consider the type of account into which you’re putting your money. Many online banks offer higher interest rates on savings accounts than traditional banks, so your money may have a better chance of growing with an online account.

Have a portion of your pay automatically deposited into the account, or set up an automatic transfer from your checking to your savings account, suggests Michele Hammond, vice president of Lending and New Development Relations at CrossCountry Mortgage in New York.

You can also use an app to “round up purchases to the nearest dollar and deposit the change into a linked savings account, allowing you to save without putting a strain on your finances.”

What You Should Know About House Down Payments

how to save for a house while renting a house

When you’ve decided to buy a house, you’ll need to start thinking about how you’ll save for a down payment and qualify for a mortgage. The more money you put down as a down payment, the more money you save in mortgage payments in the long run, which is why it’s a good idea to start saving before you start house hunting.

So, how much money do you need to put aside for a down payment? The myth is that you must have 20% of the house price ready when you close. However, if you go through a government-affiliated lender, you can get a mortgage without any money down. Know that if you put down less than 20%, your mortgage lender will almost certainly ask you to purchase private mortgage insurance (PMI) to ensure their financial security if you default on your loan.

“A PMI is just separate mortgage insurance, and it’s usually included in your monthly mortgage payment if you’re working with a lender, who will be in charge of getting it for you”, explained Lexie Puckett Holbert, director of consumer communications at®. “As soon as your principal reaches 20%, you can refinance your mortgage and have that taken off.”

#5. Save money on rent

One of the first ways renters can save for a house while renting is to reduce the amount of rent they pay. There are several approaches you can take.

1. Move to a smaller or less expensive location.

It may seem counterintuitive because you need money to move (security deposit, first month’s rent, money to move and turn on utilities), but moving to a new place could save you hundreds of dollars each month.

Not only will you save money on rent, but you may also save money on other things. You could, for example, save money on your energy bill if you downsize. Moving closer to work could save you money on gas. If water and trash collection are included in your rent, you may be able to save money.

All of those savings add up and bring you one step closer to your goal!

2. Look for a roommate.

If you can’t (or don’t want to) find another place to live, for the time being, consider finding a roommate to help you split the bills.

You could ask friends and family if they need a place to stay, post an ad in your local Facebook groups, or try Craigslist (but proceed with caution!!).

3. Consider listing your home on Airbnb on weekends.

On weekends, if you live in a touristy area, such as a big city or near attractions, you could list your place on sites like Airbnb or

If you’re not comfortable renting out the entire house, you could rent out a single room for the weekend instead.

#6. Take care of your debts

Examine your debt to see where you can save money. Mitchell recommends doing a balance transfer if you have a balance on a credit card with a high-interest rate. Many credit cards offer 0% interest on balance transfers for a set period of time, such as 12 or 18 months, but they typically charge a fee of 3% to 5% of the transferred amount.

Given the pandemic, Cruz suggests speaking with your credit card company or other lenders you’ve borrowed from. They may be willing to lower your interest rate on credit cards or student loans, for example.

Similarly, avoid incurring additional debt. To qualify for a mortgage, you must meet the lender’s debt-to-income (DTI) ratio requirement, and the lower your debt-to-income ratio, the better. To figure out where you stand, use Bankrate’s DTI ratio calculator. In general, you should keep your DTI ratio below 43%.

#7. Start a side business.

A side hustle isn’t just for college students; however, if you’re a college student renting and hoping to save for a down payment on a home someday, a side hustle is a great way to supplement your income. Become a tutor, take part in surveys and clinical trials, pet sit or babysit, rent out your car or apartment (when not in use), sell some swag online, or work a seasonal job as a caterer or tour guide. You can even earn between $25 and $50 by selling your blood, plasma, hair, sperm, breast milk, and other bodily fluids. Put every penny you make on the side into your mortgage fund.

#8. Decorate your home on a budget.

It’s very tempting to start buying good furniture now so that when you get your own house, you can start filling it with pieces you already own. However, the furniture you buy today may not fit the style of your future home or be out of style in a few years, forcing you to sell it and start over. Furthermore, expensive furniture should not be in your budget right now. Meanwhile, stick to cheaper goods (or used from Craigslist, eBay, or Freecycle) and postpone furnishing a future home until it’s yours to call home.

#9. Make more significant changes

If you need to save money for a house while renting quickly, you may need to take more drastic measures. Consider getting a roommate to help split the rent and other expenses, or even moving into a smaller, less expensive rental entirely.

If relocating is not an option, you can try renegotiating your lease with your landlord. This can be beneficial if you’ve been a good tenant or can guarantee you’ll be staying in the rental for an extended period of time. According to Apartment Guide, rents are actually decreasing in some larger cities, so your landlord may be more willing to negotiate now if it means keeping you as a tenant.

#10. Apply for government assistance programs

Many lenders offer first-time homebuyer loans and programs that can help you cover a portion of your down payment. According to Cruz, such programs may require you to occupy your home for a certain period of time, or else you will have to repay the money.

Others, such as grants, may require you to take a homebuyer education course before you can receive assistance.

Your line of work may also work in your favor. Some programs help homebuyers who work in specific occupations, such as teachers or first responders. According to Fraser, “many lenders are looking to reach out to underserved and diverse communities to improve homeownership opportunities.” If you fall into one of these categories, there may be assistance available to you.

Fraser suggests visiting, which can assist you in locating assistance programs in your area.

How Does It Take To Save For A Down Payment?

If you can save 5% of your income for a down payment, it will take you around two years and four months to save for this low of a down payment. If you save 2.5%, it will take around four years and eight months.


Saving for a down payment on a home can feel like a rite of passage, albeit a difficult one. Saving for a house while renting can be difficult, but the suggestions above may help you get closer to your goal.

The most difficult challenge for people is sticking to a plan once they understand how to save for a house while renting. They may stay on track for a while, but then something happens to throw them off.

You must keep your goal in mind as difficult as it may be to cut back on things, especially when you aren’t hyper-aware of what you’re spending. The small sacrifices you make now will be well worth it when you have enough money to put down on your dream home!

How to Save for a House While Renting FAQs

How much should I save up before looking for a house?

If you’re getting a mortgage, it’s a good idea to save at least 25% of the house price in cash to cover a down payment, closing costs, and moving expenses. So, if you buy a home for $250,000, you may end up paying more than $60,000 to cover all of the various closing costs.

How much should I put aside to save for a house?

When you start looking for financing, you may discover that many mortgage firms need at least a 20% down payment. This is done for a number of reasons, the most important of which is that with 20% down, you will be able to avoid paying a monthly private mortgage insurance cost.

What is the 30 day rule?

The 30-day savings rule requires you to postpone all non-essential and impulse purchases for 30 days. Instead of wasting your money on something you might not need, you’re going to think about it for 30 days. If you still wish to make that purchase at the end of the 30-day period, feel free to do so.

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