Smart Ways To Use Your Tax Refund When Buying a Home

Boost Your Homebuying Budget with Your Tax Refund

If you’ve been saving for a home, your tax refund could be the extra boost you need to reach your goal faster. Whether you’re planning for a down payment, preparing for closing costs, or looking to lower your mortgage rate, even a modest refund can help.

According to Freddie Mac:

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

And here’s the good news: the average refund is up 3.9% this year, based on the latest IRS data. While the amount varies for everyone, here’s how to use that extra cash strategically:

Use Your Tax Refund To…

1. Save for a Down Payment
Down payments are one of the biggest financial barriers for first-time homebuyers. But remember—you don’t need 20% down. Many loan programs allow for much less. Applying your refund directly toward your savings goal can get you there faster.

2. Cover Closing Costs
Closing costs—typically 2–5% of your home’s price—can sneak up on buyers. These fees include your appraisal, title insurance, and loan origination. Using your refund to cover these costs can reduce your upfront burden on closing day.

3. Buy Down Your Mortgage Rate
Many lenders allow buyers to pay points upfront to secure a lower mortgage rate. This strategy can reduce your monthly payment, making homeownership more affordable long term. Your refund might be just enough to take advantage of this.

Work with a Trusted Agent

A real estate agent and local lender can help you understand how to maximize your savings and tap into other financial resources. Together, they’ll help you build a strategy that aligns with your goals and budget.

Bottom Line

When it comes to buying a home, every dollar counts. Using your 2025 tax refund wisely could help you fast-track your path to homeownership. If you’re ready to make a move, connect with a real estate expert who can help you take the next step.