Saving for a house while paying rent every month? Yeah, it sounds like a bad joke sometimes. Rent already eats a big part of your income, groceries are expensive, and bills never stop coming. Then you start dreaming of owning a home and wonder if that will ever happen.
Saving while renting can be hard. Having a simple plan and making some changes can help you save money. It’s about making steady steps that bring you closer to saving for a house.
In this article, you’ll find simple tips on how to save money for a house while still paying rent, without feeling too stressed or overwhelmed.
Identify your House Deposit Goal
Before you start saving, you need to know how much you actually need. Most first-time homebuyers aim for 20% down to avoid mortgage insurance, but some loan programs allow 3 – 5%.
A “rent vs. buy” plan also helps you see what’s possible. Maybe renting makes sense for now, but setting a clear deposit goal helps you stay focused.
Create a Budget That Actually Works for You
You can’t save what you don’t track. Write down your monthly expenses – everything from rent and bills to your daily coffee. After one or two months, you’ll see where your money really goes.
A simple way to start is with the 50/30/20 rule:
- 50% for needs (rent, food, utilities)
- 30% for wants (streaming, dining out, shopping)
- 20% for savings or paying off debt
If you feel like 20% feels impossible right now, try 5% or 10%. You just need to be consistent.
Open a High-Yield Savings Account for Your Dream Home
Your money should work as hard as you do. A high-yield savings account gives a higher interest rate than a regular or traditional bank account. This can help your savings grow faster through compound interest.
Look for FDIC-insured online banks that offer competitive rates – some go as high as 4-5% annual percentage yield depending on the market.
Tip: Set up automatic transfers after each payday. When saving is automatic, you don’t have to think about it.
Cut Unnecessary Expenses
Cutting costs doesn’t mean cutting happiness; it just means being smart with your money.
Here are some easy ways to start:
- Avoid delivery apps like DoorDash. Cook at home or meal prep.
- Cancel subscriptions you rarely use. You don’t need five streaming services.
- Avoid impulse shopping online. Add things to your cart and wait 48 hours.
- Choose free entertainment – outdoor walks, community events, or your local library.
You don’t have to cut everything. Just be intentional. It’s okay to treat yourself once in a while, but plan it.
Consider Downsizing
If rent takes half your paycheck, it’s time to rethink your space.Moving into a smaller apartment or sharing rent with a roommate can help lower your rent costs.
Consider living in the smallest space that’s comfortable too. You don’t need a big place if it’s just you. Be mindful of what you own – keep what adds value and sell or donate the rest.
If it works for you, living with parents for a while can help you save faster. In many places, especially in Asia, that is very normal. It is practical and not something to feel bad about. In fact, more people today still live with their parents well into their late 20s.
Also Read: Living with Parents to Save Money
Increase Your Income and Save the Extra
Sometimes, cutting expenses isn’t enough. Prices go up because of inflation, but salaries don’t always follow. That’s when you look at ways to earn more.
Here are ideas you can try:
- Ask for a raise – prepare your achievements and reasons before asking.
- Freelance your skills online.
- Try in-demand part-time jobs like babysitting, dog walking, or delivery apps.
- Sell homemade food or baked goods to friends or neighbors.
Pay Off Debts Strategically
High-interest debt slows down your savings. Reducing credit card debt can also improve your credit score, which helps you qualify for better mortgage rates.
You can try:
- Snowball method: Pay off smaller debts first, then move to bigger ones.
- Avalanche method: Pay debts with the highest interest rates first.
Check Out Rent-to-Own and Government Assistance Programs
Rent-to-own means you rent a house now, and part of your rent helps you buy it later. It’s good if you don’t have enough money saved for a down payment yet. You get to live there and save at the same time.
Also, you can check for programs that help first-time buyers with money or tax breaks. Look at HUD.gov or ask a local housing office. A mortgage expert can help find programs that fit your money situation.
Save Unexpected Income
Got a bonus or unexpected raise from work? Keep it. Don’t celebrate with a big purchase just yet.
Add it straight to your high-yield savings account and watch it grow.
You can also save money from freelance projects, side hustles, or tax refunds. Treat those as small steps closer to your dream home.
FAQs
Is $5,000 enough to move out?
$5,000 can help you move out, but it depends where you live. In some places, that can cover a few months’ rent and moving costs. But in expensive cities, it might not be enough for the deposit, first month’s rent, and things you’ll need. Don’t forget about bills, food, and emergencies. So, $5,000 is a good start, but it’s smart to plan your money well and try to save a bit more if you can
What is the fastest way to save for a house deposit?
Cut major expenses, increase your income, and automate savings in a high-yield account.
How much money do you need before moving into an apartment?
Enough for your deposit, first month’s rent, and an emergency fund with 3 to 6 months of expenses.
How much money do you need for a house down payment?
Most lenders ask for 20%, but some loans only require 3–5%.
How to move from renting to owning a house?
Work on your credit score, build your savings, and talk to a mortgage advisor about your options.
Saving for a house while renting is all about making small, consistent steps that add up over time. If you’re also dreaming of buying a car, check out my guide on how to save for a car to start planning for that goal as well.