Monopoly made it seem so easy.
In fact, the median cost of a two-bedroomapartment rentalin the U.S. is $1,178.
Thats 35% of median take-home pay when you subtract taxes from themedian household income.
(Lets call them the Joneses.)
Yet repeatedly, surveys show that homeownership is still a staple of American financial ambition.
Onestudy from 2017found that 68% of millennial homeowners plan to own multiple homes throughout their lives.
Heres where to start if youre one of the millions trying to save for a home.
No Interest Til Almost 2027?
The idea is that the FHA insures loans from approved lenders, which limits the lenders risk.
If this is you, there aresteps you might taketo have a go at get to the 580 mark.
For veterans, there are VA loans that require nothing down.
Interest rates on FHA loans range from 4.2% to 5.99%.
This will give you a general idea of how much youll need to have saved to move forward.
The key here is patience.
Its important to compare lenders to be sure youre getting the best terms you qualify for.
What about that median family, you ask?
Theyd be looking for a home that costs about $216,000,according to Zillow.
That means theyd need to save $7,560 for a down payment.
But thats not all the Joneses have to consider.
Assuming they pay for closing costs upfront, the Joneses savings target would be just over $11,000.
But you should know that theres much more to the story.
Your mortgage payment will be only a part of what you pay each month as a homeowner.
Do your homework on the tax rate (also called millage) in your area.
Get specific with potential lenders so you dont run into unexpected fees.
According toThe Balance, $177 of the median monthly mortgage payment goes toward taxes and insurance.
Whats more, you should budget 1% of the homes value annually for maintenance costs.
If youre a first-time homebuyer, you may qualify for anassistance program in your state.
Youll want to familiarize yourself with budgeting methods to see what will work for you.
Whats important is knowing exactly where your money goes and being able to justify each expense.
The zero-based budget, for example, requires you to account for every cent.
Ask yourself of all nonessential spending: Is this worth putting off buying a home?
Think abouthow to save moneyon your big expenses.
Cut down on your current cost of living by getting a roommate or joining thegrowing trend of coliving.
Would it make sense to move into a smaller house or apartment while you save?
According toUSA Today, the cost difference between two-bedroom and one-bedroom apartments can be as much as 30%.
But dont ignore the smaller details of your finances.
Some accounts gather upward of1% interest.
It may not sound like much, but it can make a difference over time.
Jake Bateman is a former editor at The Penny Hoarder.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
