How Much Should You Save to Buy a Home? Let The Red Team Guide You!

One of the biggest questions aspiring homeowners ask is, “How much do I need to save to buy a home?” The answer varies based on several factors, but breaking it down into key components can make homeownership feel more achievable.

The Red Team is here to guide you every step of the way, ensuring you understand your savings goals and explore the best options for your budget. Let’s take a closer look at what you need to save for a $420,000 home and how we can help you get there.

1. Minimum Down Payment

Your down payment is your first major savings milestone. Many buyers assume they need 20%, but that’s not always the case. Many loan programs allow you to start with as little as 3% down—just $12,600 for a home that costs $420,000.

While putting more money down can lead to lower monthly payments and reduced mortgage insurance costs, The Red Team can help you explore different loan options to find what works best for you and get you connected with the right lenders or mortgage brokers. 

2. Closing Costs

Closing costs are often overlooked but are essential to factor into your budget. They typically range from 2% to 5% of the purchase price, with 3% ($12,600) being a common estimate.

These costs include loan origination fees, title insurance, appraisal fees, and more. Our team can help negotiate with sellers and lenders to find ways to reduce or cover some of these expenses.

3. Emergency Fund (Highly Recommended)

Owning a home comes with unexpected expenses, from maintenance to repairs. To stay financially secure, it’s recommended to have 3 to 6 months’ worth of mortgage payments saved as an emergency fund.

For a $2,500 monthly mortgage, that means at least $7,500. This will help you budget wisely and plan ahead, so you feel confident in your financial stability as a homeowner.

4. Your Total Savings Plan

Here’s a breakdown of the minimum savings needed:

• Down payment: $12,600+
• Closing costs: $12,600+
• Optional emergency fund: $7,500+
• Grand Total: $32,700+

Saving more can put you in an even stronger position by covering moving expenses, home improvements, or furnishing your new space. The Red Team will guide you in setting realistic savings goals and finding ways to maximize your purchasing power.

5. Tips to Build Your Savings Faster

We know saving for a home takes time, but here are some ways to reach your goal faster:

• Automate Your Savings: Set up automatic transfers to a dedicated savings account for your home fund.
• Cut Unnecessary Expenses: Adjust your budget and redirect savings toward homeownership.
• Explore Assistance Programs: Many grants and down payment assistance programs are available—we’ll help you find the ones you qualify for!
• Increase Your Income: Side hustles, freelance work, or selling unused items can speed up your savings timeline.

Let’s Make Your Dream Home a Reality!

Planning for homeownership doesn’t have to feel overwhelming when you have the right team by your side. The Red Team—Terra, Kim, and Kiley—are ready to help you every step of the way, from budgeting to closing on your dream home.

Want expert guidance on your home-buying journey? Contact us today—we’re here to help!