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There are many strategies for saving for a down payment, including maximizing your savings, reducing everyday expenses, and applying for down payment assistance.
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You probably don’t have to save 20% for a down payment on a home. Conventional mortgages require only a 3% down payment and FHA loans only require a 3.5% down payment, depending on your credit score.
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You will also need to consider the costs of home insurance, maintenance, and property taxes before purchasing a home.
More than half (52%) of aspiring homeowners cite down payment and closing costs as a “very important” barrier to homeownership, according to Bankrate’s 2025 Housing Affordability Report. Knowing how to minimize these costs from the beginning can save you from stressors in the future.
Here are our top ways to save for a down payment, tips on how much to put down, and a rundown of other costs to consider.
The good news is that most mortgage down payment requirements are much lower than the oft-heard 20%. Here’s how the different types of loans compare:
Of course, your minimum down payment is just one piece of the puzzle. The cost of the home you buy will also be a major factor in your down payment.
While the median home price in the U.S. was $414,900 in the last quarter of 2025, according to the National Association of Realtors (NAR), the price of a home you can expect to find varies by region and even metropolitan area. In the Northeast, for example, the median home price was $514,600, while the Midwest saw a median price of just $317,100 in the fourth quarter.
Once you have decided how much you can afford for your home, you can begin to decide how much to pay for your home and make a savings plan for your down payment.
What is the typical down payment on a home?
The average down payment for all home buyers is 19%, according to the National Association of Realtors. First-time homebuyers make an average down payment of 10%.
Learn more: How much should you pay for your house?
There are several ways to save for a house:
Although mortgage rates may be rising, that can be good news for your savings. Some banks and credit unions pay up to 4% annual percentage yield (APY) on select accounts. Consider saving your savings in one of the following:
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High Yield Savings Account: High-yield savings accounts offer significantly greater earning potential than standard savings accounts. Some currently pay between 4% and 5%, compared to 0.01% at some big-name banks.
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money market account: Money market accounts are a cross between a checking and savings account that can offer higher rates than standard savings accounts.
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Certificate of Deposit (CD): CDs are fixed-rate savings vehicles with a finite term, often six, 12, or 18 months. Consider your home purchase timeline when using CDs, as there are penalties for withdrawing money early. If your home buying plans allow time, consider a CD ladder that allows you to take advantage of changes in interest rates over time.
Another strategy is to set up automated savings deposits to ensure savings are a regular part of your financial plan. If you’re working, your employer may be able to funnel some of your direct deposits into a savings account for your down payment. Freelancers, contractors, and business owners can schedule regular automatic transfers to their savings.
If you have free time and energy, another source of income or a side job can help you save for a down payment. You could even turn a hobby into a money-making proposition.
Down payment assistance could be an option if you’re struggling to save, especially if you’re a first-time buyer. This assistance can come in a variety of forms, from deferred or forgivable loans to grants. Each program has different eligibility requirements, usually based on income and location. Start your search with the local or state housing authority in your area.
If you’re saving for a house, cutting back on your expenses can help. Here’s how:
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Lower discretionary spending. These are expenses such as subscription services, entertainment, delivery services or eating out. While you may not want to eliminate this expense completely, consider ways to spend less.
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Save money on your bills. If possible, negotiate recurring monthly or annual expenses, such as shopping for a better rate on car insurance or lowering your Internet bill.
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Pay off existing debt. A lower debt load will make you a better candidate for a mortgage, and once you’ve eliminated these payments, you can redirect the money to your down payment fund.
While it’s not an option for everyone, if you can, moving back in with your parents or moving in with a roommate can also help you save for a down payment. A large majority (64%) of Americans would be willing to make a change to find more affordable housing, according to our 2025 Housing Affordability Report.
While each company’s financial situation and performance measures vary, you may be paid more, especially if you have recently made valuable contributions at work. Come to the discussion prepared, describing the work you have done and how it affected the company’s results.
Many first-time home buyers have turned to family members for help with the down payment. If a family member or friend is willing to give you some funds for your home, be sure to document it in a gift letter to your lender.
Your down payment probably isn’t the only reason you’re putting money away. As you work toward your down payment goal, you may want to temporarily adjust where your savings go. You may be saving for retirement in an IRA or 401(k), for example, or for your child’s college education. Consider diverting some of that money briefly to your down payment fund.
One caveat: If you receive a company match for your retirement savings, you may not want to jeopardize it by reducing your contribution.
Don’t touch your emergency fund
When considering how to save for a down payment, it’s best to avoid taking money out of your emergency fund. These savings should contain three to six months of living expenses and should not be used to fund a down payment. You may need this cushion for repairs or other costs once you own your home, and maintaining a healthy savings account can help you qualify for a mortgage.
Knowing how to save for a house includes setting a reasonable schedule. Your timing depends on how much you plan to deposit and how much you can save each month. Location also matters, as average home costs vary widely across the U.S. depending on where you live.
If you hope to own a home sooner rather than later, you can choose to put down less money and settle for a higher mortgage rate or choose a longer mortgage term to achieve your homeownership goals more quickly; Just make sure you understand how these trade-offs affect your total cost of borrowing.
Do the numbers: Determine the best course of action with our mortgage down payment calculator
While the down payment is the largest home buying expense for most people, there are other costs you should consider, including:
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Closing costs: These can include origination fees, title insurance, and more. Typically, this is 2% to 5% of the principal amount.
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Mortgage reserves: Your lender may require you to have cash or accessible assets in reserve, which is equivalent to several months of mortgage payments.
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Maintenance and repairs: According to Bankrate’s 2025 Hidden Costs of Homeownership Study, home maintenance costs average $8,808 annually.
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Home insurance: Although not required like auto insurance, home insurance offers peace of mind knowing you will have help with catastrophic costs resulting from a fire, hurricane, or other covered peril. The average cost of home insurance in the United States is $2,424 per year.
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moving expenses: These vary widely, depending on the location and the number of items you are moving. The average cost of hiring professional moving companies is $1,705, according to data from HomeAdvisor.
