How Much Could You Save By Downsizing Your Home?

by Travis Pizel · 10 comments

big house
When we built our home in 2004, we paid attention to the details we thought were important at the time. We found a floor plan we liked with the right number of bedrooms, and an ample sized kitchen on a lot adjacent to a park. Unfortunately, we didn’t think a lot about how our needs would change over time. A lower level basement that had been the kids’ toy room when we first moved in now sits almost empty. They’ve both moved into stages where their main sources of entertainment are their computers (which reside in their rooms), or socializing with friends.

Our lower level basement, which is 1/4th the total square footage of our home, is used for nothing more than storage and the home of our cats’ food and liter boxes. Every time I feed the cats, I look at the large empty room and wonder how much money we could save by downsizing our home. I did a little estimating, and the amount is staggering.

Mortgage Payment

Just as a rough estimate, I calculated how much our mortgage payment would be if we sold our current home for it’s most recent appraised value, then bought a home worth 25% less than the one we currently live in. After applying the equity we’ve built up as a down payment and taking into consideration current interest rates, we’d save about $300 a month on our mortgage payment alone.

Property Taxes

Our property taxes are about $4100 per year currently, or about $340 a month. Again, just as a rough estimate, if our new imaginary home was worth 25% less, it’s logical to think that our taxes would decrease by a proportional amount, saving us another $83.75 each month.


We currently budget $300 per month for natural gas and electricity. There are times during the year when it’s higher or lower, but it’s a fairly accurate average. If we again cut that bill by 25%, we’d save $75 a month.

Total Savings

If we total the three areas of savings listed, we would save an estimated $458.75 by reducing the size of our home by 25%. Since 25% of our home is completely unused, we likely wouldn’t even notice the difference in our day to day lives.

We have a significant portion of our home we don’t use, and hence the exercise, but there are other reasons why you may be in the market for a home downsize:

  • Unused Space: Like my situation, it could be just a change in the stage of your life. Kids grow older, and even eventually move out reducing the amount space needed. Or you could have simply bought too big of a home to begin with.
  • Big Yard: That acre sized lot and a huge back yard seemed like a good idea at the time, but now it’s just a pain to maintain. By reducing the size of your lot, and the value of your home, you can save some money and also the time it takes to take care of your yard.
  • Empty Garage: Having a big garage adds storage space to your home. But maybe you’ve downsized to one car, or find that much of your garage sits empty.
  • Mindset Change:That huge island in the kitchen looked awesome when you toured the open house, but now you dread having to wipe the big counter every day.

It’s difficult to make the decision to pack up your belongings and move. It’s even harder to say good bye to the house you’ve called your home for years. But calculating how much you could save in your monthly budget every month will definitely make that decision a little easier.

Do you fall into any of the categories that indicate you could downsize your home without noticing a lifestyle difference? Have you estimated how much you could save by doing so?

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{ read the comments below or add one }

  • Alexandra @ Real Simple Finances says:

    This is a tough one, because I’m considering up sizing my home, yet moving to a much cheaper part of the country. However, your points are really good and are making me pause — it’s fine for me to want a huge property, but do I want to *care* for it? There really are some benefits to looking for smaller homes and land!

    • Travis @enemyofdebt says:

      Hey it’s absolutely fine if you want to “upsize.” If you’re comfortable with the payment, and that’s how you want to spend your money – go for it! The illustration is simply to show that if someone is looking to save money, downsizing your home is one thing to look at. Thanks for sharing your thoughts, Alexandra!

  • Rick Mayhew says:

    My parents bought a house without even looking at it (a friend looked at it for them). They ended up living there 49 years. What I learned was this: If possible, plan your house purchase so that if you end up living somewhere for 49 years, it will still be workable for you. It’s not always possible to do that, but it doesn’t hurt to add it to your home buying analysis.

    • Travis @enemyofdebt says:

      It depends upon whether you want your home to be your “forever home.” We honestly thought this would be our forever home. It could be… certainly has everything we need AND want. The problem is, it has MORE than what we need. 🙂

  • lana says:

    I’ve thought about it also. Prices have risen in our area so that if we downsize, it will result in a home price only about $60K less than our current home.

    With commission, moving costs, and saving a few dollars on taxes and utilities we won’t be saving much.

    Our home is already geared for senior living, but has enough space for three families. I feel that in order to be able to accommodate children, grand-children etc this size home will make everyone comfortable.

    I don’t think it makes sense for us.

    • Travis says:

      Sounds like you’ve run the numbers, and come up with the best decision for your unique situation, Lana – good for you! Thanks for sharing!

  • Gwen says:

    I’ve considered downsizing and I balk at the transaction cost and other expenses of selling a house. 6% real estate commission and fees, concessions you might make to the buyer, moving and cleaning, and possibly unplanned expenses related to repairs needed before closing needed to be taken into account. How do you frame those expenses when considering downsizing?

    • Travis says:

      Great points, Gwen, and things that one would certainly have to think about when contemplating downsizing. You’d want to add up what the cost of selling and moving would be, and compare it to any proceeds you might get from equity you have built up in your existing home. If downsizing actually costs you money out of pocket, you have to decide how many months it would take to recoup those out of pocket expenses, and then determine if it’s worth it. In my situation, I have quite a bit of equity built up in my home, so I’m guaranteed that downsizing wouldn’t cost me a cent out of pocket. but I should still do the analysis. 🙂

  • Bart says:

    With our oldest going off to college this year, we decided to do exactly what Travis suggests. Another factor for us was to buy a fixer upper in an older neighborhood downtown where land prices are escalating – much faster than our previous neighborhood which was doing OK, but wasn’t going to double in value within the next 5-10 years like the smaller place might.

    So far, we are very happy with the change. Only thing is, it has definitely been an adjustment to living in smaller quarters and shedding much accumulated stuff from past years to fit into the new home.

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