Are You Saving Up To Buy a Home? Your Tax Refund Can Help

Are You Saving Up To Buy a Home? Your Tax Refund Can Help

You’ve been saving diligently and dreaming of the day you finally hold the keys to a place of your own. What you might not have considered is that your tax refund could help speed up that journey. As Freddie Mac explains:

“ . . . your tax refund from the IRS can be a useful supplement to your homebuying budget.” 

If you’re expecting a tax refund this year, you can put that money toward some of the upfront costs of buying a home—like your down payment or closing costs.

And here’s some good news: this year’s average tax refund is slightly higher than last year’s. According to data from the Internal Revenue Service (IRS), the average refund is up by 3.9%. While the increase isn’t dramatic, every bit helps when it comes to reaching your homeownership goals (see visual below).

Of course, the amount you receive from your tax refund will vary, but when you're working toward buying a home, even a little extra cash can go a long way. Freddie Mac highlights a few smart ways to put that money to good use:

• Save for a Down Payment – One of the biggest challenges for many buyers is coming up with a down payment. Using your tax refund to grow your savings could help you reach your goal faster. And keep in mind, a 20% down payment isn’t always required.

• Cover Closing Costs – These costs include things like the appraisal, title insurance, and loan processing fees, typically totaling 2% to 5% of the home’s price. Putting your refund toward these expenses can help reduce your out-of-pocket costs at closing.

• Buy Down Your Interest Rate – Some lenders allow you to pay upfront to reduce your mortgage rate. If affordability is tight, using your refund to buy down your rate could help lower your monthly payment and make homeownership more manageable.

And remember—you don’t have to navigate the process alone. Partnering with experienced real estate professionals can help you understand how much you need to save, how to use your refund wisely, and what local resources may be available to you.

Bottom Line

Every dollar saved brings you closer to owning a home. While your tax refund might not cover everything, it can definitely give your homebuying journey a helpful boost.

What would owning a home this year mean for you or your family? Let’s connect and create a plan to help you get there.