Saving for a is one of the biggest financial goals you'll ever tackle. Here's how to do it strategically.
How Much Do You Need?
The old rule was 20%. Reality is more flexible:
| Down Payment | $300k House | [[PMI]]? | Pros/Cons |
|---|---|---|---|
| 3-3.5% | $9,000-10,500 | Yes | Low barrier, higher monthly |
| 5% | $15,000 | Yes | Slightly better rate |
| 10% | $30,000 | Yes | Better rates |
| 20% | $60,000 | No | Best rates, no PMI |
But wait, there's more: You also need 2-5% for .
Pro Tip
20% is ideal but not required. Many first-time buyers put down 5-10%. The key is buying a house you can afford at any down payment.
The True Cost of Buying
For a $300,000 house:
| Cost | Typical Amount |
|---|---|
| Down payment (10%) | $30,000 |
| Closing costs (3%) | $9,000 |
| Moving expenses | $2,000-5,000 |
| Immediate repairs/furniture | $5,000-10,000 |
| Emergency buffer | $10,000+ |
| Total needed | $56,000-64,000 |
Watch Out
Don't drain your for a down payment. Home emergencies are expensive. Save extra.
Where to Keep Down Payment Savings
| Timeline | Best Account | Why |
|---|---|---|
| Under 2 years | Safe, liquid | |
| 2-5 years | HYSA or CDs | Safe, slightly higher yield |
| 5+ years | Consider investing | Higher growth, more risk |
If you're buying in under 2 years, do NOT invest your down payment. A market crash right before buying would be devastating.
Saving Strategies That Work
The Math First
Goal: $30,000 down payment in 3 years Monthly savings needed: $833/month
Can't do that? Adjust timeline or target.
Automate It
Open a separate just for the house. Automatic transfer every payday.
The Boost Stack
| Strategy | Potential | Effort |
|---|---|---|
| Cut one subscription | $10-50/month | Low |
| Reduce dining out | $100-300/month | Medium |
| Side income | $500-2,000/month | High |
| Windfalls (, bonus) | Varies | Low |
First-Time Buyer Programs
Do This
Research these before assuming you need 20%:
- FHA loans: 3.5% down, easier approval
- VA loans: 0% down for veterans
- USDA loans: 0% down in rural areas
- State/local programs: Grants, low-interest loans
- Employer programs: Some offer down payment assistance
The Down Payment Decision
Less Than 20% Makes Sense If:
- You'll pay down to 20% equity quickly (PMI drops off)
- You'd otherwise wait 5+ more years
- Rent is very high compared to owning
- You have stable income and job security
Wait for 20% If:
- You can hit it in 1-2 more years
- Housing prices are likely to stay flat
- Your income is unstable
- You'd drain all savings to buy now
Avoiding Common Mistakes
Avoid This
- Buying the maximum you're approved for
- Forgetting closing costs and moving expenses
- Draining your emergency fund
- Taking on new debt while saving (hurts approval)
- Ignoring down payment assistance programs
Quick Win
Calculate your real number: Down payment + closing costs + moving + 3-month emergency fund for the new home. That's your true savings goal.