Buying a house? Here’s how to save (and how much)

One key step is finding the best mortgage lender for your needs and securing the best rate that you can. Another is saving up the funds you’ll need for a down payment once you identify a home you want to buy. While the exact amount you’ll need for a down payment will vary based on factors such as where you want to live and the sticker price of the home, there are some guidelines that can make saving for a home more attainable. 

Here’s what you need to know.

How much should you save for a house?

It’s technically possible to purchase a house with cash. But, in most cases, homebuyers will need a home loan—a mortgage—for a transaction this large. That’s especially true considering the median sales price of homes in the United States has been above $400,000 since 2021.

Typically, the biggest upfront cost will be the down payment, though buyers should also remember there will be closing costs to pay out of pocket. And while those who are selling a home at the same time as buying may be able to use proceeds from the sale to cover the down payment, first-time homebuyers will typically need to pull their down payment from savings. 

A commonly quoted rule of thumb recommends putting 20% down when buying a home. According to a 2025 report from the National Association of REALTORS, the median down payment for all homebuyers is 15%. However, the minimum down payment you can make is typically much lower than either of these numbers, and varies by type of loan.

You may be able to put as little as 5% down with a conventional loan, or 3% if you’re a first-time homebuyer. With a VA loan or a USDA loan, you might be able to buy with no down payment.

Buying a home with 3% to 5% down

With a conventional loan, which is just a regular mortgage from a private lender, the minimum down payment is typically 5%. For example, on a $300,000 home, 5% would mean a $15,000 down payment. However, first-time homebuyers may be able to put just 3% down.

That would mean rather than needing $15,000 for your minimum down payment in the scenario above, you’d need just $9,000. And, the definition of “first-time homebuyer” might be a little broader than you’d assume upon first hearing it. In general, you may be considered a first-time homebuyer if you have not owned a home in the past three years.

Another type of mortgage with a minimum down payment in this range is the FHA loan. These are offered by private lenders but are insured by the Federal Housing Administration. For applicants with a credit score of at least 580, the minimum down payment is 3.5%.

While FHA loans can be a good option for buyers who might struggle to get a good rate on a conventional loan, those with good or excellent credit might do better with the conventional loan.

Buying a home with 0% down

The two main types of home loans that don’t require a down payment are VA loans and USDA loans. Both have strict requirements that mean many homebuyers will not qualify.

In general, VA loans are available to U.S. military members and veterans, as well as surviving spouses. For detailed eligibility criteria, see this page from the U.S. Department of Veterans Affairs. These loans are issued by private lenders but insured by the VA.

USDA loans are meant to help low- and moderate-income buyers purchase homes in eligible rural areas. Note that USDA guaranteed loans are similar to FHA and VA loans in that they are issued by private lenders and insured by the government, but USDA direct loans are issued directly by the U.S. Department of Agriculture.  

Buying a home with 10% down

There are at least a couple cases where a homebuyer might have to put at least 10% down. For one thing, we mentioned FHA loans earlier—and while there’s a 3.5% minimum down payment for borrowers with a 580 or better credit score, some lenders will still work with borrowers who have a score as low as 500. In that case, a minimum down payment of 10% will be required.

Another instance you might have to make at least a 10% down payment is if the amount you need to borrow exceeds conforming loan limits set by the Federal Housing Finance Agency, meaning you’ll need to apply for a jumbo loan to buy the home. As of 2025, the baseline conforming loan limit is $806,500, with the limit increasing to $1,209,750 in certain parts of the country.

You can expect the minimum down payment on a jumbo loan to be at least 10%, with some lenders setting the minimum at 25% or even 30%. 

Jumbo mortgages are also generally going to come with stricter requirements in terms of multiple home appraisals and the state of your finances.  

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Buying a home with 20% down

While in many cases you won’t be strictly required to put 20% down to buy a home, there is a big reason it’s advantageous if you can afford to do so— avoiding private mortgage insurance. With conventional loans, if your down payment is less than 20%, you typically have to pay for PMI. 

The cost of PMI will vary based on factors including your credit score, your loan amount, and more, but a Freddie Mac estimate puts it in the ballpark of $30 to $70 per month for every $100,000 you borrow. On a $300,000 home with $9,000 down, that means PMI might add somewhere in the vicinity of $87 to a little over $200 to your monthly mortgage payment.

You can ask your lender to remove PMI once you reach 20% equity based on the value of your home at the time of purchase. And, when you hit 22% equity based on that value, your lender should automatically remove it.

Still, if you have the funds to put 20% down while also covering closing costs, you might decide it’s worth it to skip PMI entirely. Plus, making a large down payment has the added bonus of setting you up to be able to tap your home equity sooner should you decide a home equity loan or home equity line of credit might be advantageous. 

6 steps to save money for a house 

Armed with the knowledge of what mortgage type you might choose to apply for and its down payment requirement, the next thing is to create a financial plan that will give you a blueprint to follow as you save. Below are a few steps that can help set you up for success.

1. Create a budget—and stick to it 

As with any financial goal, creating a realistic, achievable budget is key to saving money for a home purchase. The first step is to make sure you’re tracking spending accurately. There are a variety of apps available that let you sync accounts and track this more or less automatically. Or, if you prefer a slightly lower tech option, you can log receipts in a spreadsheet. 

Once the tracking is in place so you have an accurate picture of what you’re spending, you’ll be able to identify what’s essential and where you have room to cut back. For example, your rent or mortgage payment can be expected to be a consistent, concrete expense each month. But discretionary spending categories such as restaurant dining, entertainment, and hobbies may present opportunities to be more intentional with your money management.

You may also find that having separate accounts for different purposes can help you save money. For example, you might have a main checking account where you keep money for daily spending and recurring bills and separate savings accounts for your emergency fund, the down payment you’re building up, and any major hobby-related expenditures you expect to make.

Once you’ve gamed out how much you need to save for a down payment, you may wish to automate a transfer for that amount to savings each month. You may have heard this savings tactic referred to as a “sinking fund,” where you save bit by bit for one-off or irregular expenses. 

2. Downsize your expenses 

After you’ve established a firm budget, you’ll be able to identify areas where you can cut back on spending. To be clear, we’re not suggesting you go without fun entirely—that’s an easy way to burn out quickly on your attempt at budgeting. But, it’s crucial to set attainable spending limits and identify how you can balance discretionary purchases with long-term goals.

One way that Erika Kullberg, an attorney and popular personal finance influencer on social media, told Fortune she recommends people prioritize their spending is via color coding. After recording your spending for the past 30 days on paper, Kullberg suggests taking green, yellow, and red highlighters and marking each transaction. Green means it brought you joy, yellow means you felt lukewarm about it, and red means a purchase brought no joy to you.

Using this method, you can identify what’s important for your daily happiness and mental wellbeing while eliminating or reducing spending that doesn’t fully serve your needs.  

3. Pay off debt 

If a chunk of your monthly income is going toward high-interest debt, you may need to consider paying down your balances before proceeding with your house hunt. By reducing or eliminating the debt you’re carrying, you might potentially save thousands per year that you can instead put toward your down payment fund. You may also improve your debt-to-income (DTI) ratio, which is an important metric lenders consider when deciding how large a mortgage you qualify for.

To prioritize your payments, you might choose either the debt avalanche or the debt snowball method. The former saves money by prioritizing loans with higher interest rates first. By contrast, the latter method prioritizes smaller loans first so you get some wins early on.

When you’re several months or a year or more out from buying a home, you have some flexibility. For example, you might move credit card balances to a card with an introductory 0% APR offer, or use a personal loan to consolidate high-interest credit card debt.

As you get closer to applying for a mortgage, you want to cease applications for new credit, as recent inquiries can affect how much mortgage lenders are willing to approve you for.

4. Find ways to increase income

Cutting down on discretionary spending might be just one piece of the puzzle. If you have an opportunity to increase your income, that could make building your down payment fund a more feasible endeavor. Of course, this step involves some measure of luck and circumstance. 

If you’re in a good situation at work, you may attempt to negotiate a raise. Timing plays a role—you may have a better shot at success if your ask coincides with review season rather than coming at a random point. You’ll also want to compile as much evidence and data as possible demonstrating past successes so you have a firm case why a pay increase is merited.

But, if negotiating a raise or an expanded role in your current situation is not feasible, consider researching side gigs such as driving for a ride-share service or selling items on eBay. 

Each person’s situation will be different, and there’s no one-size-fits-all solution here. But, if you can find a way to increase your income, even temporarily, it may help get over the hump of saving for a down payment and getting into your first home.    

5. Plan for extra costs

Aside from your down payment, you’ll need to plan for a few other expenses involved with buying a home. Some out-of-pocket expenses to expect include:

• Closing costs. These are the administrative costs associated with getting a mortgage, including origination fees, title searches and insurance, taxes, and other miscellaneous fees, which typically run about 2% to 5% of the total loan amount. On a $300,000 home, that would mean closing costs of approximately $6,000 to $15,000. 
• Moving expenses. Relocating from your current place to your new home will likely require hiring some professional help, as well as spending money on boxes, bubble wrap, etc. Plus, you may need to perform some initial home repairs or upgrades to make your new home move-in ready. 
• New furnishings and appliances. You might also need to invest in things like a new couch, dining table, refrigerator, or bedroom set, especially if your new home is bigger than the last. Be sure to account for expenses that help make your house more comfortable and livable.

Planning for each of these expenses is important, as is finding the right balance between saving enough money and timing your purchase so it works for your family.

The takeaway

With the real estate market constantly fluctuating, it’s impossible to time the market in the sense of when you’ll get the absolute lowest rate or lowest home price. Rather, to set yourself up for success, focus on the factors you can control—creating a realistic budget, paying down debt, saving at least the minimum down payment based on the type of loan you plan to take out, and planning for closing costs as well. Saving for a home isn’t a sprint, but a marathon.

As you get closer to entering the homebuying market, do your research and connect with a real estate agent you can trust as well as loan officers at a few different mortgage lenders. They’ll be able to help you gauge how competitive things are in the area where you want to buy, how much home you can afford, and what your monthly payment might look like on various properties.