Saving for a house means building a dedicated down payment fund — typically 3–20% of the purchase price — plus 2–5% for closing costs. The fastest path: automate contributions to a high-yield savings account, research down payment assistance programs, and protect the money from market risk as your target date nears.
Buying a home is the largest single purchase most people make, and the down payment is the biggest upfront hurdle. How much you need — and how long it takes — depends on loan type, purchase price, and how aggressively you save. The CFPB's homebuyer guide is a strong starting point for understanding the full process.
Down payment requirements vary by loan type. Conventional loans can go as low as 3% down (for first-time buyers), FHA loans require 3.5% with a 580+ credit score, and VA and USDA loans require 0% for eligible buyers. Putting less than 20% down on a conventional loan typically adds private mortgage insurance (PMI) to your monthly payment. Beyond the down payment, budget 2–5% of the purchase price for closing costs. The CFPB closing cost explainer breaks these down item by item.
Keep your down payment money separate from your everyday accounts — in a high-yield savings account (HYSA) or money market account. Avoid investing down payment funds in stocks or funds if you plan to buy within 3–5 years; market volatility could shrink your balance right when you need it.
Set up a recurring transfer from checking to your dedicated down payment account on payday — before the money hits your spending pool. Treating the transfer like a non-negotiable bill is the single most reliable way to build the balance consistently. Even $500/month compounds meaningfully over a few years when earning a competitive APY.
Most states, counties, and some municipalities run programs that provide grants or low-interest second loans to help first-time (and sometimes repeat) buyers cover the down payment. The HUD local homebuying resources point to each state's programs. Requirements typically include income limits, purchase price caps, and a homebuyer education course.
First-time homebuyers can withdraw up to $10,000 from a traditional or Roth IRA penalty-free (though income taxes still apply on traditional IRA withdrawals). Roth IRA contributions — not earnings — can always be withdrawn tax and penalty-free. The IRS exceptions to the early-withdrawal penalty cover the first-home rule.