According to August 2025 data from Redfin, U.S. home prices have risen 1.6% since last year, and the current median price of a home is $439,894. For many first-time homeowners, saving for a down payment on a home of this price or higher is a significant hurdle to overcome.
While saving thousands of dollars for a new home might be challenging, there are a few different ways prospective owners can afford a first-time home buyer loan.
Let’s examine a few ways to help you save for a down payment on your first home.
Set a savings goal for your type of home loan
First, remember that different types of home loans may have different down payment requirements. Each type may require you to set a different savings goal.
For most types of loans, the minimum down payment allowed will also depend on your credit and income. If you’re seeking a mortgage backed by the government, like one backed by the Federal Housing Administration (FHA), you may be able to qualify with a lower down payment. Mortgages backed by the U.S. Department of Veterans Affairs (VA) typically don’t require a minimum down payment.
You may want to meet with a financial advisor and speak with them about the type of home you hope to purchase and set a firm savings goal for a down payment that is within your reach. Discuss your options and understand what other requirements you might have to meet to qualify.
Automate your savings
After you’ve set your savings goal, you may want to make automatic contributions to your savings account. If you set an amount to transfer at regular intervals, you can try to calculate a timeline for when you can meet your savings goal. You could also consider using a high-yield savings account, which can help you earn more interest than a standard savings account as you build your savings.
Cut unnecessary spending
If you want to meet your savings goals more quickly, you might want to examine some of your spending habits and see if you can contribute more of your funds to your down payment savings. For instance, consider reviewing your bank statements to look for subscriptions or services you no longer use.
Once you redirect some of these funds, you can put them toward your down payment savings goal.
Boost your income
While cutting some of your spending habits may be a start to saving more money, you might also consider raising your income to reach your savings goals faster. If your current income is supporting your lifestyle but not yielding extra funds for savings, then you might need an additional stream of income, such as a second job, to meet your savings goals.
Your new income stream could go directly into your savings fund, allowing you to add more funds than you previously could toward your down payment. Likewise, if you get an annual bonus or a tax refund, those funds could also go directly toward your savings goals.
Tackle debt to free up more cash flow
Having too much debt over your head can make it difficult to save money. Surplus funds you could be contributing toward your savings account end up going toward paying off your debt. When you can pay off your debt, you’ll have more funds to go toward your down payment goal.
Paying off your debt obligations allows you to save more money and decrease your debt-to-income (DTI) ratio, which is calculated by dividing your monthly debts by your gross monthly income. A lower DTI ratio increases your borrowing power, potentially allowing you to access better interest rates for a home loan.
Adjust your lifestyle in the short term
You may also consider making certain lifestyle changes temporarily to reduce your living expenses.
For example, you might get a roommate to help pay rent or move into a cheaper property until you’ve saved enough. Or, you might not take your usual vacation this year so that you can put more funds toward your savings.
While these might not be your preferred lifestyle choices, they may be worth it if you can meet your savings goals.
Finding the right down payment savings strategy for you
Different savings strategies might work better or worse for different people, so it’s important that you find the right combination for your lifestyle. You might not have the capacity to work a second job, but you may be able to cut down on unnecessary spending to help meet your goals.
At the end of the day, saving as early as possible is vital. Set a goal that works for you and think about adding some of these strategies to your savings routine.
