Saving for a home in 2025 is quite discouraging. Wages are not keeping up with rising home prices, making families wonder if they’ll ever afford a house. According to a survey from CNET, 31% of adults said that getting a raise or better wages would help them save for a home. In 2023, the average household income was $80,610, yet there has been a 145% increase in home prices. According to Redfin, the average home now costs $433,000, and families will now need to earn over $100,000 to buy one of these homes. And it’s not just in the bigger cities. Cities that used to be affordable are quickly becoming more expensive. These cities include:
- Knoxville, TN ($354,000)
- Bakersfield, CA ($340,000)
- Richmond, VA ($351,000)
- Tucson, AZ ($351,000)
- Vallejo, CA ($500,000)
If you’ve lost motivation to buy a new home, here are some creative ways to stay motivated while saving for a home.
Consider Less Popular But More Affordable Areas
A lot of the most expensive housing markets are in the bigger cities with the best job markets, amenities, and school districts. If you can’t afford to live in your dream area, consider a less popular but affordable area. Some less popular cities are growing economically. There may be new housing developments and construction of homes, and new businesses may be opening in these cities soon. These up-and-coming areas also have sectors that align with your industry. If you’re an entrepreneur or investor, you can bring business to this area and create jobs for residents.
Like any city you want to relocate to, you should research the safety and crime rates. Look at the FBI Crime Data Explorer where you’ll find your state’s latest crime data. You can also visit local police departments’ websites for the latest crime statistics in the city you want to live in. Talk with potential neighbors and ask them about how safe certain neighborhoods are.
Research your local school district and look at the schools’ latest ratings to determine which schools are a good fit for your children. Research the private schools and compare tuition rates as well as curriculum programs. If you’re homeschooling, make sure the city offers plenty of resources to help your family succeed at it well. Look for local homeschooling organizations and co-ops you can join for support.
Put All Surplus Income Toward Saving for a Home
If you’ll receive a bonus, lawsuit settlement, tax refund, or an inheritance soon, use the surplus income toward your down payment savings. This accelerates your savings, and it keeps you motivated to achieve your goals. Place your savings in an online high-yield savings account. Choose this account because it offers a better interest rate than traditional banks. Online high-yield savings accounts offer between a 1% and 5% interest rate. Automate your savings every pay period from your check to boost savings.
Inquire About FHA, USDA, and VA Loans
Saving for a home doesn’t require a 20% down payment. That’s because of certain loan programs that let you put 3.5% down on a new home. The first of these loans is an FHA loan. This loan is backed by the Federal Housing Administration and you should look for lenders that offer FHA loans. To qualify for an FHA loan, you’ll need a credit score of at least 580, but it’s best if your credit score is at least 620. The drawback of FHA loans is the private mortgage insurance you pay. This insurance protects the lender if you default on the loan. If you want to get into real estate investing, an FHA loan is a good choice because you can buy up to a 4-unit home as long as this home is your primary residence. You can live in one unit and rent out the others.
Now let’s discuss USDA loans. These loans are designed for people in rural areas who desire homeownership. These mortgages are backed by the USDA Rural Development Guaranteed Housing Loan Program, and many lenders offer this loan. This loan has no down payment requirements, and the interest rates are affordable. Unlike FHA loans, you don’t need to pay private mortgage insurance. To qualify for a USDA home loan, you must have steady income and a credit score of at least 640. The home you buy must be in a USDA-eligible and you can check a home’s eligibility by visiting the USDA website.
Veterans can get affordable housing through VA loans. There is no required down payment for this loan, but other restrictions exist. To qualify for a VA loan, military service personnel or veterans must have served in wartime duty for at least 90 days, or at peacetime for 181 days. Spouses of veterans who passed away while on duty also qualify for VA loans. They’ll also need to complete a certificate of eligibility when applying for the loan.
Look at Different Homes
You don’t want to obsess over possible houses while saving for a home, but occasionally it’s good to stay motivated by looking at homes in your ideal neighborhood and suitable for your budget. Attend a few open houses to understand what you want in a home. Think about the entertaining you’ll do in your future home. Think about how you would like to renovate and decorate the home.
Think About the Benefits of Homeownership
While saving for a home, think about the benefits of homeownership. You’ll have a home that you can personalize without many restrictions. Your home can earn you income because if you buy a multifamily property, you can rent units to tenants for income. You can pass your home to your children and grandchildren after you pass away.
Listen to Others’ Success Stories
Watch YouTube videos and podcasts about successful homebuyers. Take notes and highlight any creative methods they used to purchase their homes. For example, some people saved money by purchasing a foreclosure at a local sheriff’s auction. Or you may hear about another person who used his investment income to buy the home with cash.
Consider Down Payment Assistance Programs
The purpose of down payment assistance programs is to offer funding to families who need help with saving enough money to buy a home. Most states have these programs, and you’ll need to research your local housing authority and your state’s different agencies to apply for these programs.
These tips will keep you motivated on your home-buying journey. Don’t rush the process. You don’t have to meet others’ guidelines as to when you should own a home. It’s better to take your time and buy the right home than feel pressured and regret your purchase years later.