GOAL: Home Sweet Home

If saving money for a down payment on a new home or a major renovation project is one of your financial goals, you’re not alone. We’ve got some ideas to help you achieve your homeownership goals without disrupting the rest of your financial plan.

Get Started in 3 Easy Steps
Step 1

Step up your savings

Most potential homebuyers need several years to build up the money needed for a down payment. Mutual funds offer potentially higher rates of return than bank accounts over longer periods, and every bit of growth brings your home goals closer.

Step 2

Select an account

There are many types of investment accounts. For most people, saving for a home means opening an individual or jointly owned taxable account. But it is possible to use funds in a retirement IRA for a first-time home purchase without incurring any penalties. This can be a good strategy for some people, but there are restrictions, so you should discuss the option with a tax advisor.

  • Suggested for this goal
  • Could also work for this goal
  • Not typically used for this goal
Step 3

Choose your funds

You may want to consider to choose funds with low volatility, such as Homestead’s Daily Income Fund or Short-Term Bond Fund. But depending on how long you plan to save up, you might look into a blended portfolio that includes a small amount of a conservative stock fund, such as Homestead’s Value Fund. Equities carry higher risk and aren’t right for everyone, but historically they have delivered higher long-term returns. Regardless, when you’re just a year or two away, it will be time to move to a money market fund to reduce your risk exposure.

Saving for a new home or major renovation project is typically one component of a broader financial plan. Once you’ve met your goal, you’ll want to continue to focus on your longer-term objectives, such as retirement.

Your next step:
You can open an account in any of our funds online today. If you need help deciding which fund or combination of funds is right for you, visit the Make a Plan page.  Or, call the Homestead service line at 800.258.3030 and choose option 2.