Here’s How Much You Need To Save Annually To Buy a House in Florida in 5 Years
Written by
Chris Adam
Edited by
Amber Barkley
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You may be looking to make a move to Florida in the next few years. It’s a popular state with nice weather and plenty to do for all ages. But some parts of Florida can be pricey, both in real estate costs and cost of living.
If you’re looking to buy a house in Florida, here’s a look at how much you need to start saving annually.
Housing Prices in Florida
When planning to buy a house in a few years, it can help to take a look at where prices currently stand, so you have a better idea of how to budget. According to Redfin, the median sale price for a home in Florida is $410,500.
At the most basic level, if you were to save for five years to afford a house in Florida, you would need to put aside $82,100 annually to afford the current median sale price. Of course, that assumes you were paying outright for the entire cost of the home.
Mortgage and Upfront Costs
More realistically, you’re going to want to determine your monthly mortgage budget and save for upfront costs. As a general rule of thumb, you don’t want to spend more than 30% of your gross income on your monthly mortgage payment.
Additionally, you’ll want to save up for upfront costs. According to Space Coast Credit Union, closing costs are typically 2.5% to 3.5% of the home’s purchase price in Florida. “While it’s a good idea to save 20% for a down payment to avoid private mortgage insurance, you should have a separate savings account with 3-6 months’ worth of expenses for emergencies,” according to the credit union.
Your Budget and Savings
You can take some steps now to prepare for buying a house in Florida. According to Experian, “To prepare to buy a house in five years, identify how much it’ll likely cost, evaluate your current finances, tweak your budget to allow for more saving and improve your credit.”
Say the average home in Florida will sell for $420,000 in five years. If you plan to make a 10% down payment, you’ll need $42,000. You can plan to need an extra $30,000 for other expenses and an emergency fund for moving in. That brings your total to $72,000 to save over five years — that would be $14,400 per year, or $1,200 per month.
Here’s where you can get specific about the budget for your new house and look for ways to cut back on spending and bring in more income. You can set your budget so you can save that $1,200 per month.
You can make it easier on yourself by automating your savings. That means transferring the monthly amount you need to a dedicated account, perhaps a high-yield savings account. This can help you stay on track to buying that house in Florida in five years.
To help yourself when securing a mortgage, you can make a plan to pay off existing debts and improve your credit score. With these steps, along with doing your research, you can find a good mortgage option with a low interest rate.
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