6 Smart Tips: How to Save Money for a House While Renting

Buying a home isn’t easy, especially if you are renting and don’t have family help to cover a down payment. Rising interest rates, record-high home prices, and tough lending requirements can make the dream of homeownership feel out of reach.

But here’s the truth: While the road to buying a house in today’s economy may be steep, it’s not impossible. With the right plan in place, and by improving your credit along the way, you can save money faster, qualify for better loan terms, and reduce upfront costs.

Let’s break down what you need to know about how to save money for a house while renting, and explore how your credit score plays a key role in making homeownership more affordable.

Understanding the Financial Hurdles for Renters

Renters face a unique set of challenges when transitioning to homeownership. Beyond the obvious (home prices and mortgage rates), here are some of the major hurdles:

• - Down Payment: While you might be able to find a 0% down payment option, you will typically need at least 3%–20% of the home’s purchase price as a down payment.
• - Closing Costs: These can range from 2%–5% of the loan amount and include fees like inspections, taxes, and lender charges.
• - Credit Requirements: A lower credit score can mean higher interest rates, which translate to higher monthly payments and other costs.
• - Cost of Moving and Furnishing: Even after buying, you’ll need funds for moving, furniture, and basic repairs.

With inflation driving up the cost of living and rent prices remaining stubbornly high, strategic saving and financial planning have never been more essential.

Tip: Try using the Home Buyer Savings Calculator from Credit.org to see how much you need to save based on your home goals.

6 Effective Saving Strategies While Renting

Saving money takes time, but there are plenty of effective strategies to help speed up the process. Here are our top tips to help you save money faster.

1. Track Every Dollar

Tracking “every single dollar” might seem like overkill, but you can’t have control of your finances unless you know where all your money is going.

Tori Dunlap of Her First $100K recommends scheduling a monthly “money date” with yourself to review your spending in a way that feels enjoyable, not stressful.

Set the mood with cozy clothes, snacks, music, or whatever makes you feel good. Then, go through your statements, categorize your spending, and look for areas to cut back.

Turning this into a monthly ritual helps you stay consistent and even look forward to budgeting.

2. Create a Budget

Once you know where your money goes, it’s time to give it a plan. Start with a bare-bones budget that covers essentials like rent, food, utilities, transportation, and existing debt.

From there, decide how much you can comfortably spend on extras and how much to save for your future home. Budgeting this way helps you spend with confidence – yes, even on that $7 latte – because you’ve made an intentional choice.

Tip: Automate your savings so a set amount moves into your savings account each payday.  

3. Find Ways to Save More

Cutting costs can speed up your savings. If your lease is ending, consider a cheaper place or getting a roommate.

You can also lower bills by negotiating with service providers – ask about discounts on subscriptions, insurance, or your phone plan. An improved credit score may even qualify you for lower rates or fees.

4. Reduce High-Interest Debt

High-interest debt like credit cards can quickly stunt your savings goals. Focus on paying more than the minimum to reduce your principal and boost your credit score.

If extra payments aren’t possible, consider options like a balance transfer card, personal loan, or debt consolidation. This could ultimately save you thousands in interest, and help you pay your debt off faster.

5. Increase Your Income

This is where you can get a little creative with your savings goal. Take on a side hustle, start freelance work, sell unused items, or pick up extra hours.

Even small amounts, like $100/month, can make a big difference in your savings. Apply raises, tax refunds, or bonuses directly to your home fund, as well.

6. Use a High-Yield Savings Account

A standard savings account earns next to nothing in interest. Open a high-yield savings account (HYSA) to earn more on the money you’re setting aside. Just make sure it's FDIC-insured.

The Impact of Credit Scores for First Time Home Buyers

Your credit score isn’t just a number, it’s a powerful tool that directly impacts your ability to buy a home. Here’s how:

• - Mortgage approval: Lenders use your credit score to help determine risk. The higher your credit score, the better your chances of approval.
• - Interest rates: Better credit scores can unlock lower interest rates. Over a 30-year mortgage, that can mean tens of thousands of dollars saved.
• - Down payment: Some loans, like FHA or VA loans, have lower or zero down payment options – but you will still need to meet credit requirements to qualify.

Learn More: How to Prepare Your Credit for a Mortgage

How Improved Credit Reduces Upfront Home Buying Costs

Here is something many renters don’t realize: your credit score can reduce the amount you need to save.

• - Lower PMI: Private mortgage insurance (PMI) is required on many loans with down payments under 20%. Better credit = lower PMI premiums.
• - Loan qualification: Higher credit scores can open doors to loans with reduced down payments, sometimes as low as 0%.
• - Negotiating power: Good credit may even help you negotiate better terms with lenders or sellers.

Learn More: How to Prepare Your Credit for a Mortgage

Strategies to Improve Your Credit Score for Home Buying

If your credit needs work, you’re not alone – and it’s never too late to start improving. Here are some proven tips to help you raise your credit score, which can help you save money for a house:

Pay Bills on Time

Payment history makes up 35% of your FICO score. Set up automatic payments or reminders to avoid missed or late payments.

Lower Your Credit Utilization

Keep your credit card balances under 30% of your total limit. If you can, aim for below 10% for an even better impact.

Don’t Open New Debt

First time home buyers should avoid applying for new credit cards or loans before applying for a mortgage, as it could temporarily lower your score.

Monitor Your Credit Regularly

Check your credit reports often to catch and dispute errors or fraud before they cause damage to your credit score. Check out the CreditBuilderIQ Dispute Hub if you want help with your disputes.

How CreditBuilderIQ Helps You Build Home-Buying Power

CreditBuilderIQ gives you smart, personalized tools to help strengthen your credit profile and prepare for homeownership. Whether you’re just getting started or working to recover from past damage, we offer a range of benefits to support your credit-building goals:

Dispute Hub

Easily generate and send professional dispute letters to the credit bureaus to challenge inaccurate or outdated items on your credit report. Removing errors or inaccuracies can make a significant difference in your score.

New! Rent Payment Reporting

We help you get credit for the rent you’re already paying with premium rent payment reporting. CreditBuilderIQ reports your on-time rent payments to all three major credit bureaus, where most competitors only report to one.

Your rent typically doesn’t show up on your credit report, so adding it creates a new tradeline. Even better: only on-time rent payments are reported, creating a positive record that can quickly boost your credit score without taking on new debt.

Credit Report Review

Our AI-powered Credit Report Review scans your credit report to flag potential errors and provide personalized, actionable tips to help improve your credit. It takes the guesswork out of what’s hurting your score and helps you focus on the changes that matter most.

Monthly Credit Reports & Score Tracking

Track your progress over time with updated credit reports and scores each month*. Know what’s working and where you stand before you apply for a home loan.

Improving your credit now can help you qualify for better mortgage rates, lower monthly payments, and more home-buying opportunities.

Ready to build your credit smarter? Explore how CreditBuilderIQ works.

First Time Home Buying FAQs

We hear from a lot of first time home buyers. Here are answers to some of the most common questions we receive about how to save money for a house.

How do I save money for a house fast?

Cut unnecessary expenses, increase income, and automate savings to a high-yield account. Improving your credit can also reduce the amount you’ll need to save upfront.

What is a good budget to save for a house?

A general rule is to aim for 10%–20% of the home’s purchase price. Use this savings calculator to create a personalized goal.

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

You’ll need enough to cover the down payment, closing costs, moving expenses, and an emergency fund. For many first-time buyers, that’s $15,000–$40,000+.

Ready to Achieve Your Home Buying Dream?

If you’re renting and dreaming of owning a home, don’t get discouraged by the headlines. The path to homeownership is still within reach – it just takes strategy, persistence, and a strong credit profile.

By budgeting wisely, boosting your income, and improving your credit with tools like CreditBuilderIQ, you’ll be in a much stronger position to buy when the time is right.

Take the first step toward buying your future home. Start building your credit with CreditBuilderIQ today.

*Available on select plans.