How To Save For A House (Plus EVERYTHING else you'll need to know)

Lets get back to the basics in terms of saving enough for a down payment to buy real estate, what you’ll need for lenders to give you money, and some things to prepare for before you start buying a house. Enjoy! Add me on Instagram/Snapchat: GPStephan

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It begins with the following:
Good credit - Anything above a 740 generally gets the best rates.

2 years worth of tax returns - This shows that your income is consistent and that you’ve built up some work history.

Bank Statements and proof of income for the last 2-6 months - this way you can prove how much money you’re actually making and spending. With that, they can calculate what your debt to income ratio is - banks prefer those who save a lot, and spend very little.

Cash reserves - sometimes it can be 3-6 months of mortgage payments, taxes, insurance, and a buffer in liquid cash or assets.

Pretty much any time you buy real estate, you’ll need a down payment. Banks want to see that you have your own money at risk when you buy a house…this down payment forms your initial equity in the property. Generally 15-20% down is about what I’m seeing.

If you don’t put down 20%, you’ll generally need to pay PMI which stands for private mortgage insurance. This is an extra cost that helps assure the bank you’ll be making your payments, since the less money you have in the deal, the higher the risk is that the bank will lose money in the event you foreclose.

If you can qualify lower down payments and the numbers make sense, go for it. But in more expensive markets, you’re going to need more money down. Some other options might be available like a VA loan where you can buy with 0% down - so this will be up to you figure out what’ll be best.

When saving for a property, it’s really about setting your priorities and deciding what comes first - if buying a property is your number one priority, it might make sense to cut back in other areas just for the sake of accomplishing this.

One other strategy I like to use is to automate my savings. I have one bank account where all of my money is deposited and saved - this is Ally Bank. Then I have a Bank of America account for my expenses. I’ll only transfer a certain amount of money every month to bank of America, this means that everything else I have is pretty much already stashed away.

Finally, generally banks won’t want the mortgage payment to exceed about 44% of your total income after expenses.

Again, with this, it’s all cutting back as much as you can. You really have to make this a priority to save as much as you can.

Now for those who just don’t earn much money in the first place, the reality is that you’ll need to either cut back on your expenses as much as you can and save the difference - or work to increase your income. There’s no way around it, there’s no way to sugar coat this - if you’re not earning enough money, you’ll need dedicate yourself to making more money. This is one of those things where if you want it bad enough, you will somehow find a way to make it happen.

Now one more thing I do when it comes to saving is to keep it all in a high interest savings account. Most people want to invest it, although in the short term, there could be too much volatility to risk it in the markets.

Ultimately, when saving up for a down payment, it really just comes down to income vs expenses - and once that’s handled, banks will look at the bigger picture to determine what you’d be qualified to receive. And patience and discipline here goes a long way - you will need to do this long term consistently.

Suggested reading:

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[cerebralvision]

HGTV: "My husband picks apples for a living and I give hoolahoop lessons. Our budget is 4 million dollars."

[FullTimeEuphoria]

That awkward moment when I learned more in 15 min that 4 years of high school about great life advice

[nixpaFPS]

Honestly I’m 16 and not saving for a house anytime soon. But I still watch all of these videos cuz it’s somehow just really entertaining.

[DanielGarcia-zzeg]

Here's the key to buying a house. Build your wealth first
Pay off any debts.
Then after 2 years of good wealth coming in, buy a house.

Never rush to buy a home, take all the time to buy

[derrickp]

As a former mortgage underwriter it is good to see a real estate agent that actually understands the mortgage process.

[mudkipzjabroni]

I’m about to close on my first duplex next week, and it wouldn’t have been a reality without finding your channel a year ago. Going to be a homeowner at 22! 😁

[royalhighness]

When you stop learning, you get left behind.
Never stop educating yourself

[sageoblouk]

Graham: "You will need to make a sacrifice."

"Honey... bring me the kids."

[Firesealr]

"Live below your means." "But always be expanding your means."

[Aless.D]

>This is a very interesting and informative video.
Are you someone who reads as much as possible about potential investments and asks questions about them? If so, maybe you don't need investment advice. However, if you are busy with work, children, or other responsibilities, or if you feel that you are not knowledgeable enough to invest on your own, seek professional investment advice.

[justinstockwell]

I just cut out tacos and $5 coffee from my lunch routine two days ago. With tip i'm saving minimum $15 a day. If you add in the bacon egg and cheese biscuit and orange juice i would also get a few times a week, now it's well over $20 a day i'm saving with the only extra effort being the ham sandwiches i make in the morning. So in a way i get paid $20 to eat oatmeal and make 2 sandwiches.

[marisastoneobrien]

Graham, I am a mortgage broker and this is excellent! This is the perfect overview with enough details to be actually useful. The only thing I would add is have your credit pulled by a mortgage broker 3-6 months before you start shopping for a house. There might be things on your credit report that are not accurate and there might be some tweaks the buyer can do a head of time to raise the credit score and the lower the interest rate.

[adventuremanintheclouds]

He nailed it right on the head. For the last 2 years, I have made running my business and maximizing my income in order to save up and to qualify for a house my primary goal in life. I have been willing to lose friends, relationships, and my overall happiness, lol.
I have worked and worked and worked some more. I had a little bit of fun here and there but I mostly had 1 purpose in life, and that is to buy a house.

I close on my new home in 14 days :) ❤

[Robinson]

Parents giving money 10, 000 to their kids where are those parents I need money 😅😅😂😂

[AwesomeFinish]

I just wanted to add that once you start down the road of saving, bettering your credit score and managing your finances you will find it's actually fun! It's almost like a hobby. And when you start seeing the results it will energize you do even more!

[guitardude]

My wife and I have been religiously saving and working towards our goal of for a DownPayment - 1year Reserve Account and Retirement savings.
Its not easy but we are getting there. Thanks for the extra tips.

[tobie]

I look up to you man I’m 18 soon to graduate and I really want to make something of my life and not Slave at a 9 to 5 job for the rest of my life to grow old and not be able to enjoy my life. Keep up the videos I’m Learning a lot. I hope to invest in Real estate in the future!

[HeatherLeBas]

This is the definition of Quality Content 🔥👊

[marybennett]

"in less than five years, I have no idea what the market is going to be doing" WELL GRAHAM covid-19 would like a word

[sunderwire]

Graham actually teaches valuable life skills, unlike when I was in High School