How to budget for a home in 2025

If buying a home is on your to-do list this year, now is the time to create a spending plan to get there. Here’s how to budget your way to homeownership in 2025.

Set your goal.

The idea of budgeting can make you feel like you’re depriving yourself if you don’t have a goal. However, if you remind yourself that you’re setting spending limits so you can achieve something you want, you’re more likely to feel a sense of satisfaction that can motivate you to keep going. Create a vision board or drawing of your future home and tape it to your refrigerator to remind you what you’re budgeting for.

Price out your day-to-day needs.

While you’re saving up for homeownership you still have to pay rent, and for other needs like food, medicine, and gas. Write down how much money you have available each month after you pay for those necessities and put some of it toward your home buying goals.

Focus on cutting debt.

One of the best things you can do if you’re preparing to buy a home is pay down debts such as credit cards. By doing so, you’ll likely see your credit score rise, which may lead to better mortgage terms from a lender. While you don’t have to wait until you’re debt-free to buy a house, see what one expense you can cut from your budget that you can put toward paying your debt down.

Find money for financial education.

While you’re budgeting in order to buy a home, don’t forget about the value of financial education. Spending a small amount on a homebuying class can help you qualify for free money to put toward your downpayment and closing costs. Some homebuyers have saved tens of thousands of dollars thanks to first-time homebuying programs that they qualified for after taking a class. Spend the money upfront to save big down the road.

Cut back to increase your savings.

Any amount you can save is a good thing. But if you can increase that amount, that’s even better. Look for ways to cut costs so you can buffer your savings. Even if you don’t need that money for a downpayment, you may want to use it after you close on the deal. At the very least you’ll have more money to furnish your new house.