13 Essential Money-Saving Tips to Help You Buy a House for Less

4. Shop around for the best mortgage rates.

Buying a house can be a lot to manage. You’ll need to keep tabs on property listings you like, make time for house tours, and handle your regular responsibilities, too. The stress of it all can tempt you into taking shortcuts — like going with the first mortgage lender you find or sticking with your bank because it’s easy.

Shopping for a mortgage will require an extra layer of communication and paperwork, but doing so can help you get a better mortgage rate and reduce what you pay in fees.

According to a Freddie Mac study, buyers who apply for mortgages with multiple lenders can potentially save $600-$1,200 annually.

You’ll also want to compare lender fees from each company so that you don’t get taken to the cleaners on extra charges. Fees for the loan application, loan origination, and credit report, for example, are optional and vary among lenders. You won’t know who’s offering a better deal unless you collect multiple loan estimates.

If one lender is offering fewer charges but another one seems easier to work with, you may be able to use competing loan estimates as a negotiation tool to improve your terms. Just be sure to collect them in the same 45-day window to avoid hurting your credit.

Consider alternative mortgage options

Beyond conventional loans, different mortgage structures might save you money:

• Adjustable-Rate Mortgages (ARM): Lower initial interest rates than fixed loans, ideal if you plan to sell before the rate adjusts.
• FHA Loans: Easier qualification with lower credit score requirements.
• VA & USDA Loans: No down payment required for eligible borrowers.

5. Go for the house that ‘needs TLC.’

According to a survey of prospective buyers, 56.1% of Americans say they would prefer to buy a turnkey home over one that requires renovations, and an additional 37.8% regarded the home’s move-in ready status as somewhat important. But the smaller percentage who’d be open to buying a fixer-upper will enjoy the opportunity to find a bargain.

For one, fixer-uppers typically list for 29% below market value. This may give you the chance to choose a higher-end neighborhood at an affordable price point and improve the property little by little over time.

In addition, homeowners who anticipate they’ll need to make repairs on their new home may be able to finance the cost of those improvements through their mortgage. Options like the FHA (Federal Housing Administration) 203(k) loan and Fannie Mae HomeStyle Renovation program are designed to do exactly that.

6. Bundle your inspections.

Depending on the features and condition of the home you choose to buy, you may need to order additional inspections beyond the general one. Paying for each of these additional inspections a la carte can add up, but you may be able to save by bundling them. For example, some home inspections will bundle a pest inspection into a standard home inspection for an additional fee. In addition, a radon test on its own costs about $420 on average, but adding it to your regular home inspection will range between $90-$250.

7. Save for a bigger down payment for a better deal.

This advice may seem counterintuitive: How does putting more money down save you when you purchase a house? However, a larger down payment, even if it’s more expensive upfront, can reduce your costs in several ways.

If you’re struggling with the down payment, you could consider tapping into your personal network for assistance. Online platform HomeFundIt, for example, makes it easier for friends and family to make contributions without having to write paper checks or gift letters. (Note: HomeFundIt is available to use with standard conventional loans, but not with renovation loans, FHA, VA, USDA, or jumbo loans).

However, don’t try and extend your means beyond what’s comfortable. You don’t need 20% down to buy a home. According to the National Association of Realtors, the median down payment in 2024 was 18% for all buyers and 9% for first-time buyers.

8. Look into down payment assistance programs

Many first-time homebuyers qualify for government-backed programs that provide grants, low-interest loans, or tax credits to assist with down payments. Options include:

• FHA Loans: Require as little as 3.5% down.
• VA Loans: No down payment required for eligible veterans.
• USDA Loans: No down payment required for qualifying rural properties.
• Local & State Assistance Programs: Many states offer first-time homebuyer grants. Check HUD’s website or local housing authorities for options.

9. Avoid private mortgage insurance (PMI) fees

PMI is an extra monthly expense for buyers who put down less than 20%. Here’s how to minimize or avoid it.

• Put at least 20% down to eliminate PMI entirely. The higher your down payment, the lower your mortgage rate will likely be. In addition, if you’re able to put at least 20% down on a conventional loan, you’ll avoid having to pay private mortgage insurance, which annually costs between .5% to 1% of the entire loan amount until you hit 20% equity.
• Request PMI cancellation once you reach 20% equity in your home.
• Refinance later to remove PMI if home values rise or your loan balance decreases.
• Consider lender-paid PMI (higher interest but no monthly PMI fee).

10. See if your profession qualifies you for any perks.

Depending on your line of work, you could qualify for a special type of loan, price discount, or closing cost assistance. Teachers, for example, are eligible for a host of homebuyer programs. Law enforcement, firefighters, emergency technicians — in addition to teachers — can get 50% off the list price of a home through the Good Neighbor Next Door program.

Farmers and other rural households may be able to apply for a USDA loan, while VA (Veterans Administration) loans make buying a house more affordable for military veterans and their spouses.

In addition, your real estate brokerage could offer additional incentives as a “thank you” for what you do. “Our agency has a ‘Heroes Program,’” says top-selling Charlotte, North Carolina real estate agent Kyle Bender.

“If you’re military, if you’re a veteran, if you’re a doctor, a nurse, a teacher, we’ll give you money back at closing.”

11. Participate in specialized programs that include savings incentives.

Fannie Mae’s HomePath Ready Buyer Program is a special program Fannie Mae uses to offer up their previously foreclosed upon properties. Because they are previous foreclosures, HomePath properties are typically offered below market value, and you can save even more money if you take the HomePath Ready Buyer Program educational course, which lets you save up to 3% on your closing costs.

12. Negotiate closing costs with sellers or lenders

Closing costs can add thousands to your upfront expenses, but you can reduce them by:

• Asking the seller for concessions: Some sellers may cover part of your closing costs, especially in a buyer’s market.
• Shopping for lenders: Some lenders offer credits to help offset closing costs.
• Waiving unnecessary fees: Review your loan estimate and ask about waiving origination or processing fees.

13. Buy less house.

It seems obvious, but buying more house than you can afford will leave you feeling cash-strapped every month. The solution? Search for homes on the lower end of your budget instead of stretching your limits. To determine your ideal price range, consult HomeLight’s Home Affordability Calculator, which takes into account your current income, savings, and monthly debt. (Note that our calculator is a great starting point; however, it’s not a guarantee of how much you can afford).

You may be struck by the space and beauty of the priciest homes you see. But a smaller, more affordable home could mean that you’re able to make a higher down payment to secure a better mortgage rate or afford updates to improve the home to your liking.

In addition, a lower-priced property can reduce your property tax bill significantly. Property taxes are calculated by multiplying the local government’s tax rate (aka mill levy) by your assessed value. The lower the assessed value, the less you pay in property taxes.

Saving on the biggest purchase of a lifetime

A house is no small expense. In addition to the sticker price, you’ll need to account for an estimated 2%-5% in closing costs, plus taxes, maintenance, and insurance that will add to your monthly housing costs. With home prices rising so rapidly in recent years, home affordability has only become a bigger challenge. However, with the right real estate agent, the diligence to shop around, and a smart budgeting plan, you’ll end up in a home that you love while knowing you did everything you could to keep costs at a minimum.

*This information is for educational purposes only and not intended to illustrate available APRs or mortgage-related marketing under the Truth-in-Lending Act Section 1026.24.

Header Image Source: (Matthew Henry / Burst)