4 ways to free up your budget (and your life) with a smaller home

May 26, 2022

Does buying a smaller home mean financial freedom? It depends on your mortgage and your lifestyle. Let’s discuss the financial perks of downsizing, plus a few unexpected costs to watch out for.

The decision to downsize can be scary and liberating all at once. You may question where your adult children or guests will sleep at your smaller home. Or how your dog will cope with a smaller backyard (or no yard at all). There’s no doubt you’ll need to adjust. On the other hand, buying a smaller home can simplify your life and free up your budget. With less home to pay for every month, you could save for the future or spend more on your favorite hobbies. Here are four financial benefits of buying a smaller home.

1. Lower mortgage costs

Whether you’re purchasing a condo, house or townhome, smaller often means less expensive. You’ll love getting a smaller mortgage bill each month. And after you sell your current home, you could use any earned equity to fund your next down payment while pocketing anything left over.

2. Lower property taxes

When you buy a smaller home, you can usually expect a smaller bill for your property taxes, too. Simply put; less square footage means there’s less to tax. However, it’s important to remember property taxes vary by location. Do your research before buying. You should know the average cost of property taxes in your new area over the last five years.

3. Lower utility bills

Are you running the air conditioning in July in Arizona? Heating a house in Alaska in March? With less home to warm in winter and less space to cool in summer, you can expect significant savings. You’ll save even more if your next home has modern windows and good insulation.

4. Fewer maintenance costs

Keeping a home running takes cleaning, yardwork and repairs. Not only is that physically and emotionally exhausting, the cost adds up over time. With less physical space to maintain, you may save money on cleaning services, landscaping and outdoor supplies, DIY projects and more!

Hidden costs to watch for

Surprise expenses are the last thing you need in your smaller home. Don’t underestimate the cost of Home Ownership Association fees, which are charged monthly on top of your mortgage and can increase over time. It’s also important to think about the cost of living in your neighborhood and the cost of refurnishing your home. Will your current furniture fit the smaller layout? If not, you’ll need to save room in your budget.

Home, sweet home is about more than money

Despite the financial benefits of downsizing, it’s most important to find the right home for your personal and emotional needs. Some people downsize to help pay off debt, while others simply want a more manageable space. There’s no wrong way to do it. And luckily, there are a variety of mortgages designed to help finance exactly what you need.

Ready to downsize? Reach out to a mortgage loan officer in your area and they’ll help you get started.

Learn about U.S. Bank

Visit usbank.com

800-872-2657

Prequalify

Related content

6 tips for trust fund distribution to beneficiaries

Preparing for retirement: 8 steps to take

How to build wealth at any age

How to manage your money: 7 tips to improve your finances

LGBTQ+ financial planning tips

Investment strategies by age

Should I itemize my taxes?

Your 5-step guide to financial planning

6 things to know about long-term care insurance cost and benefits

What is Medicare? Understanding your coverage options

How much money do I need to start investing?

6 questions to ask before buying a new home

8 steps to take before you buy a home

Military homeownership: Your guide to resources, financing and more

Are professional movers worth the cost?

What to know when buying a home with your significant other

Building a dream home that fits your life

Mortgage basics: How does your credit score impact the homebuying experience?

Mortgage basics: 3 key steps in the homebuying process

Mortgage basics: How much house can you afford?

Mortgage basics: Buying or renting – What’s right for you?

Mortgage basics: Prequalification or pre-approval – What do I need?

How you can take advantage of low mortgage rates

Mortgage basics: Finding the right home loan for you

Home buying myths: Realities of owning a home

How does inflation affect investments?

5 financial goals for the new year

Retirement savings by age

Annual insurance policy review checklist

OCIO: An expanding trend in the investment industry

Tips for realtors to help clients get their homeownership goals back on track

How I did it: Turned my side hustle into a full-time job

Retirement plan options for the self-employed

5 reasons why couples may have separate bank accounts

It's possible: 7 tips for breaking the spending cycle

Closing on a house checklist for buyers

How do interest rates work?

How to plan and save for adoption and in vitro fertility treatment costs

Multiple accounts can make it easier to follow a monthly budget

Is it time to get a shared bank account with your partner?

Don’t underestimate the importance of balancing your checking account

7 steps to keep your personal and business finances separate

Which is better: Combining bank accounts before marriage — or after?

At your service: outsourcing loan agency work

30-day adulting challenge: Financial wellness tasks to complete in a month

Estate planning checklist: 8 steps to secure your legacy

8 steps to choosing a health insurance plan

Key milestone ages as you near and start retirement

How I did it: Bought a home without a 20 percent down payment

5 ways to maximize your garage sale profits 

Asset classes explained: Cash, bonds, real estate and equities

How digital platforms streamline client onboarding for investment funds

What is a home equity line of credit (HELOC) and what can it be used for?

Estate planning documents: Living trusts vs. will vs. living will

Why estate planning is important

Understanding yield vs. return

What type of investor are you?

How a Health Savings Account (HSA) can benefit your retirement plan

Year-end financial checklist

Housing market trends and relocation impact

How liquid asset secured financing helps with cash flow

The ongoing evolution of custody: Tips for renewing your custody contract

Key considerations for launching an ILP

A first look at the new fund of funds rule

Interval funds find growing popularity

Finance or operating lease? Deciphering the legalese of equipment finance

Buying or leasing? Questions to ask before signing a contract

ESG-focused investing: A closer look at the disclosure regulation

Insource or outsource? 10 considerations

The secret to successful service provider integration

The unsung heroes of exchange-traded funds

4 questions you should ask about your custodian

Safeguarding the payment experience through contactless

COVID-19 safety recommendations: Are you ready to reopen?

Unexpected cost savings may be hiding in your payment strategy

Employee benefit plan management: trustee vs. custodian

Changes in credit reporting and what it means for homebuyers

How institutional investors can meet demand for ESG investing

High-cost housing and down payment options in relocation

4 benefits of independent loan agents

Crypto + Relo: Mobility industry impacts

For today's relocating home buyers, time and money are everything

How to sell your business without emotions getting in the way

5 steps to take before transitioning your business

10 tips on how to run a successful family business

Talent acquisition 101: Building a small business dream team

Costs to consider when starting a business

How to test new business ideas

The costs of hiring a new employee

How to expand your business: Does a new location make sense?

How to build a content team

Multigenerational household financial planning strategies

Do I need a financial advisor?

How to track expenses

How to manage your finances when you're self-employed

Good debt vs. bad debt: Know the difference

Reviewing your beneficiaries: A 5-step guide

How to talk about money with your family

Financial steps to take after the death of a spouse

Retirement advice: How to retire happy

Retirement income planning: 4 steps to take

Preparing for retirement: 8 steps to take

Working after retirement: Factors to consider

4 steps to finding a charity to support

Year end tax planning tips

A guide to tax diversification in investing

Bull vs. bear market: What do they mean for you?

Start a Roth IRA for kids

Investing myths: Separating fact from fiction in investing

What Is a 401(k)?

ETF vs. mutual fund: What’s the difference?

What are alternative investments?

4 times to consider rebalancing your portfolio

7 diversification strategies for your investment portfolio

Why compound annual growth matters

How to start investing: A beginner’s guide

5 questions to help you determine your investment risk tolerance

Tips for navigating a medical hardship when you’re unable to work

11 essential things to do before baby comes

Checklist: 10 questions to ask your home inspector

Resources for managing financial matters after an unexpected death

What you need to know as the executor of an estate

What documents do you need after a loved one dies?

Checklist: financial recovery after a natural disaster

How I did it: Paid off student loans

Bank Notes: College cost comparison

From LLC to S-corp: Choosing a small business entity

Recognize. React. Report. Caregivers can help protect against financial exploitation

Is online banking safe?

Pros and cons of a personal line credit

3 tips for saving money when moving to a new home

Is raising backyard chickens a good idea financially?

Uncover the cost: Wedding

Uncover the cost: International trip

Tips to overcome three common savings hurdles

Adulting 101: How to make a budget plan

Personal loans first-timer's guide: 7 questions to ask

3 awkward situations Zelle can help avoid

How can I help my student manage money?

You can take these 18 budgeting tips straight to the bank

Save time and money with automatic bill pay

Do you and your fiancé have compatible financial goals?

U.S. Bank asks: Transitioning out of college life? What’s next?

U.S. Bank asks: Do you know your finances?

Personal finance for teens can empower your child

How to save for a wedding

Here’s how to create a budget for yourself

9 simple ways to save

Dear Money Mentor: How do I set and track financial goals?

Lost job finance tips: What to do when you lose your job

Money Moments: 3 smart financial strategies when caring for aging parents

Money management guide to financial independence

Money Moments: 8 dos and don’ts for saving money in your 30s

7 financial questions to consider when changing jobs

Travel for less: Smart (not cheap) ways to spend less on your next trip

What’s in your emergency fund?

What you need to know about renting

How to stop living paycheck to paycheck post-pay increase

Understanding guardianship and power of attorney in banking

What financial advice would you give your younger self?

How grandparents can contribute to college funds instead of buying gifts

How to open and invest in a 529 plan

Using 529 plans for K-12 tuition

Parent checklist: Preparing for college

What to consider before taking out a student loan

How to use debt to build wealth

Know your debt-to-income ratio

Checklist: 10 things to look for when touring a home

Overcoming high interest rates: Getting your homeownership goals back on track

Is it cheaper to build or buy a house

For today's homebuyers, time and money are everything

Crypto + Homebuying: Impacts on the real estate market

Should you buy a house that’s still under construction?

How I did it: Bought my dream home using equity

Buying a home Q&A: What made three homeowners fall in love with their new home

House Hacks: How buying an investment property worked as my first home

Managing the impacts of appraisal gaps in a hot housing market

How I did it: Built living spaces to support my family

Spring cleaning checklist for your home: 5 budget-boosting tasks

Saving for a down payment: Where should I keep my money?

Your guide to breaking the rental cycle

Checklist: 6 to-dos for after a move

What are conforming loan limits and why are they increasing

Uncover the cost: Building a home

The lowdown on 6 myths about buying a home

4 ways to free up your budget (and your life) with a smaller home

Get more home for your money with these tips

Money Moments: Tips for selling your home

Money Moments: How to finance a home addition

How I did it: My house remodel

First-time homebuyer’s guide to getting a mortgage

Dear Money Mentor: When should I refinance a mortgage?

Beyond the mortgage: Other costs for homeowners

10 ways to increase your home’s curb appeal

10 questions to ask when hiring a contractor

5 things to avoid that can devalue your home

What is an escrow account? Do I have one?

Is it the right time to refinance your mortgage?

These small home improvement projects offer big returns on investment

Should you get a home equity loan or a home equity line of credit?

Is a home equity line of credit (HELOC) right for you?

How to use your home equity to finance home improvements

How do I prequalify for a mortgage?

Home equity: Small ways to improve the value of your home

Can you take advantage of the dead equity in your home?

4 questions to ask before you buy an investment property

10 uses for a home equity loan

Car shopping: Buying versus leasing your next vehicle

Take the stress out of buying your teen a car

Questions to ask before buying a car

What you should know about buying a car

Equal Housing Lender

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.