How To Save Up Money for a House

More than 60% of Americans who don’t currently own a home feel that homeownership is out of reach, with 85% of first-time homebuyers citing financial barriers, according to a 2026 FICO survey. Between high home prices and high mortgage rates, saving for the upfront and ongoing costs of buying a house can seem daunting.

But there are also savings programs, down payment assistance programs, low down payment loan programs, and homeownership counseling resources that can help lower the barrier to entry into homeownership. In this guide, we’ll walk you through setting a savings goal, opening the right savings account, boosting your savings with effective strategies, and utilizing local programs and resources to help you achieve your goal of owning a home.

How much to save before buying a house

The minimum amount you need to buy a house depends on factors including the loan type, home prices in your area, your eligibility for down payment assistance programs, the type of property, and your financial profile. 

Down payment

A down payment is a percentage of a home's purchase price, paid upfront. Although a 20% down payment is traditionally the rule of thumb, the size of your down payment depends on factors such as the type of loan and lender requirements. 

As you think about how much you can afford for a down payment, keep in mind that paying the bare minimum is likely to increase your overall costs, long-term. The smaller the down payment, the bigger the amount you have to borrow. Also, some lenders may view smaller down payments as a sign of higher risk, which could mean a higher interest rate. The size of your down payment can also affect how much you pay for mortgage insurance. 

Depending on the type of loan, you typically have to pay a minimum of:

• 3% down for conventional mortgages
• 3.5% down for an FHA loan with a minimum 580 credit score
• 10% down for an FHA loan with a minimum 500 credit score
• 0% down for a VA loan or USDA loan (if eligible)

Homebuyer assistance programs offer options such as low-interest or deferred-payment loans, forgivable loans, or grants that you don't have to repay. However, if the program doesn't fully cover the initial costs, you may have to contribute some of your own money to a down payment.

Upfront mortgage insurance costs (if applicable)

Depending on the type of loan and the lender, mortgage insurance could be an upfront cost to consider saving for. Examples include:

• FHA loans: Most single-family FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the loan amount, plus an annual premium of 0.15% to 0.75%, depending on loan amount, loan-to-value ratio, and the loan’s term. The upfront premium can typically be folded into the loan, so borrowers can finance it over time.
• VA loans: Eligible borrowers generally don’t make a down payment, although many pay a one-time VA funding fee — between 1.25% and 3.3% of the loan amount. The percentage varies by down payment and whether they’ve used a VA loan before. Some borrowers are exempt. 
• USDA loans: Instead of mortgage insurance, USDA loans require an upfront guarantee fee of 1% plus an annual fee. They also may require a $25 technology fee. 
• Conventional loans: A down payment of less than 20% typically means you have to purchase private mortgage insurance (PMI). Although PMI is paid monthly in most cases, some lenders may offer options to pay the entire sum upfront or through a combination of a partial upfront payment and monthly payments.

Closing and post-closing costs

In addition to a down payment, you’ll need enough money to cover closing costs and other expenses such as necessary repairs and furnishings. You should also have enough of a cushion to cover at least a few months of housing expenses, which can include:

• Mortgage principal and interest 
• Property taxes 
• Homeowners insurance
• HOA fees for condos and other properties with homeowners associations

In addition, be prepared for ongoing repairs and maintenance, which are part of the ongoing cost of homeownership. Fannie Mae recommends setting aside 1% to 4% of the home’s value annually for these expenses, depending on the age of the property and your location. 

How long does it take to save for a house?

It took the typical household seven years to save for a down payment in 2025, according to Realtor.com. How long it takes you depends on factors including your savings, income, existing debt obligations, credit score. If you're already a homeowner, you can shorten the timeline by using proceeds from the sale of your current house toward the purchase of your next one.

If you want to get an idea of your timeline based on your unique financial situation, it’s a good idea to meet with a HUD-approved housing counselor. You might also consider completing a first-time homebuyer course. “Some lenders even give you better terms for finishing one,” says Jethro Adedeji, founder and CEO of Crowned Credit.

You should also get a copy of your credit report from AnnualCreditReport.com so you can look for and correct any errors. 

A higher credit score typically improves your chances of qualifying for a lower rate on a mortgage. For example, a 6% versus a 7% rate on a $400,000 loan equates to a savings of nearly $95,000 on a 30-year loan and a monthly payment $263 smaller. 

Even after you’ve removed negative marks on your credit report, “don’t rush straight into a home purchase,” says Adedeji. “Take time to build strong positive accounts, because lenders aren't just checking that the negatives are gone. They want to see an established file that proves you're a safe bet.”

You’ll also want to make sure that you have stable employment and income and can manage a mortgage payment and other housing expenses before you buy a house. 

How to save for a house faster

Set a savings goal

Figure out how much you need to save by looking at prices of starter homes in nearby areas and calculating the minimum upfront cost required for the loan programs you qualify for. Ideally, you won’t spend more than three to five times your annual household income on a house, depending on your existing debt, future earnings, and estimated mortgage rate. However, that goal is not always realistic. Base your budget on an affordable total monthly housing payment — including principal, interest, taxes, insurance and HOA dues.

Trim your budget

Evaluate your budget and identify areas where you can cut back. Limit dining out, cancel unused streaming services, or swap lattes from the gourmet coffee shop for a to-go mug of home brew to save for closing costs. Target bigger-ticket items to help with the down payment. If you’re currently renting, for instance, consider downsizing to potentially save hundreds per month. If going from a three- to a two-bedroom could save you $500 monthly, you could pad your savings by $18,000 in three years.

Automate transfers

Determine how much you can afford to put toward your homebuying fund each month and set up an automated transfer into your savings account. Putting your savings on autopilot helps ensure steady growth. 

Work with a housing counselor

A housing counselor can analyze your financial situation and help you identify the quickest path to homeownership. A HUD-approved housing counselor may charge a nominal fee for counseling services, but you’ll get expert advice and guidance that could give you a leg up. 

Consult a loan officer: “A knowledgeable lender can help customize a plan based on your goals and recommend the best path toward homeownership,” says Jeff Grove, mortgage loan officer at DFCU Financial. “For example, some people assume they need to pay off debt when they may actually be better served by increasing their savings, and vice versa.”

Explore down payment assistance programs

Research local down payment assistance programs you may be eligible for. They might help lower the savings threshold you need to reach before you can start looking for a home. 

Use gift funds: One-quarter of first-time homebuyers use gift money from family or friends to fund a down payment when buying a home, according to the National Association of Realtors (NAR). If someone close to you is willing to invest in your future, it can help you achieve homeownership faster. In the case of family loans, however, make sure your benefactor knows the potential tax implications. 

Consider borrowing from your 401(k)

While there are risks to borrowing from your 401(k), a retirement plan loan could be worth considering if your plan allows borrowing. You can borrow up to $50,000 or 50% of your vested balance, whichever is less, and you may be allowed to repay the loan over a term greater than the standard five years if you use the money for the purchase of a primary residence. If half your vested balance is less than $10,000, you may be able to borrow up to $10,000.

Keep in mind, though, that this type of loan can limit the growth of your retirement savings and the loan's balance could become a taxable distribution if you change jobs before repaying it. 

Where should you keep your down payment savings?

You should keep your down payment savings in a dedicated savings account that earns a high rate of return, allows regular, automated deposits, and permits penalty-free withdrawals so you can access the funds when you’re ready to shop for a home.

Check with your current bank to see if it offers any of the following options, and whether you can use your customer relationship to negotiate more favorable terms.

High-yield savings account

A high-yield savings account could offer favorable return rates and other perks, including:

• APY (annual percentage yields) ranging from 3.00% to 4.00%
• No monthly maintenance fees or penalties
• Automated transfers
• Minimum opening deposit requirements as low as $100

Money market account

Another option is a money market account, which also offers both high yields and easy withdrawals. Money market accounts may offer unlimited cash withdrawals from an ATM but limit electronic transfers. Depending on your financial habits, you might view this as a convenience or a temptation to spend your savings.

Money market mutual fund

Money market accounts are not to be confused with money market mutual funds, which are investment accounts offered by brokerage firms. Money market mutual funds are considered relatively low-risk investments, but they still come with some degree of financial risk. 

Certificate of deposit

If you’re saving on a longer time horizon, you can also consider a certificate of deposit (CD). You’ll sacrifice some flexibility, as CDs require you to keep your money locked away for a fixed period of time (early withdrawals typically incur a fee), but you can sometimes find higher rates. 

Are there programs that can help you save for a house?

Individual Development Accounts

Some local governments and nonprofit agencies offer Individual Development Accounts (IDAs) for prospective homebuyers, which are programs that match savings you deposit in a dedicated account. These programs are designed to encourage eligible participants to reach a savings goal. In some cases, you don’t need to repay the matched funds, and the money can help you meet the minimum down payment requirement for the loan program. However, eligibility is typically limited to participants with lower incomes.

Homeownership vouchers

If you’re eligible for the Housing Choice Voucher program and your local housing authority offers a homeownership program, you can apply to use your voucher to buy a home. You can also receive ongoing assistance with your monthly housing expenses. 

Down payment assistance

Down payment assistance programs can also help by reducing the amount you need to save for a house upfront. Programs may be available from local nonprofit organizations, local government agencies, or your state housing finance authority. Some down payment assistance programs are only available to first-time homebuyers or first-generation homebuyers, while others are available to low-income homebuyers. For some programs, you may also need to meet requirements for income limits and residency. Assistance can take on many forms, including:

• Grants, which you don’t need to repay
• Loans that may be forgiven if you stay in the home for a specified period
• Low-interest or deferred-payment loans you can use toward a down payment
• Shared appreciation loan programs that you repay with a percentage of your home’s appreciation when you sell

What costs go into buying a house?

Homebuying costs can include:

• Lender fees: “Lender fees can swing from $1,500 to over $3,000 depending on who you finance with,” says Adedeji, so it makes sense to compare lenders. You can shop around for 45 days without incurring multiple hard inquiries on your credit report.
• Earnest money: After a seller accepts your offer on a house, you typically make a good-faith deposit, called earnest money, to show the seller you’re serious about buying. Earnest money can be a small percentage of the purchase price or a flat amount. In most cases, you can apply the deposit toward your down payment or closing costs on closing day, but there’s a chance you could lose the cash if you walk away from the sale without cause. 
• Home inspection and appraisal fees: Home inspection and appraisal fees are typically due at the time of service, though appraisal fees are sometimes paid at closing. A standard home inspection costs an average of $400, according to the NAR. Depending on the home, you may also need specialized inspections, like mold, radon, or asbestos, which cost extra. 
• Down payment: Your down payment is one of the upfront costs of homebuying that you’ll need to pay in cash. Minimum down payments typically range from 0% to 10% of the home purchase price depending on the type of mortgage. The average down payment also varies by state. 
• Mortgage interest: Your mortgage interest rate is the cost of borrowing expressed as a percentage of the loan amount. You’re likely to pay a higher rate if you have a lower credit score, which will increase your monthly payments and overall costs over the life of the loan. Since most mortgage loans are amortizing loans, you’ll pay more interest in the early years of the loan term. 
• Mortgage discount points: Some lenders offer mortgage discount points. You pay upfront for mortgage points in exchange for a lower interest rate over the life of the loan. Points can save you money in the long run, but you’ll need to spend more upfront to close. 
• Attorney fees: Lender’s attorney fees are typically included in closing costs, but if you want to hire a real estate lawyer to represent your interests, you’ll pay extra. 
• Closing costs: You’ll also pay other fees at closing, such as title insurance and government taxes. These costs vary by location, but total fees generally range from 2% to 5% of the home purchase price. Negotiating seller concessions could help you cover closing costs. 
• Mortgage insurance: As discussed earlier, mortgage insurance (or its equivalent with some government-backed loans, called funding fees) could be an upfront cost with certain types of loans. 
• Repair costs, upgrades, and furnishings: While you may negotiate for the seller to cover major repairs based on the inspection contingency in your home purchase agreement, it’s likely you’ll still have a few minor repairs or aesthetic upgrades to pay for out of pocket. A fresh coat of paint, new carpeting, and new furniture are all costs to consider. 
• Property taxes: You may need to prepay a portion of your annual property taxes at closing. Keep in mind that your property taxes may increase after the first year, depending on price appreciation in your area and local laws. “To avoid surprises, ask your real estate agent or lender to help estimate what your future property taxes may be before you buy,” says Grove.