How To Save For A Down Payment

More than half (52 percent) of aspiring homeowners cite the down payment and closing costs as a “very significant” obstacle, according to Bankrate’s 2025 Home Affordability Report. Here are our top tips to save for a down payment, advice on how much to put down and a rundown of other costs to consider in your budget.

How much do you need for a down payment?

Most mortgages come with minimum down payment requirements that are far lower than the oft-heard 20 percent. Here’s how the different loan types compare:

Typical down payment

The median down payment for all homebuyers is 18 percent, according to the National Association of Realtors.

How to save for a down payment: 8 ways

When it comes to how to save for a house, there are several ways to do it:

1. Park the savings somewhere you can earn more money

While you might be worried about mortgage rates that are much higher than they were in recent years, the current interest rate environment is great news for your savings. Select banks and credit unions are paying upwards of 5 percent APY on deposits. If your money is currently stashed in an account with a nominal interest rate, think about moving your money to one of these places:

• High-yield savings account: High-yield savings accounts earn their name by offering significantly higher earning potential than standard savings accounts. For example, some online banks are paying between 4 and 5 percent for high-yield savings customers.
• Money market account: Money market accounts are a cross between a checking and savings account. So, you can still easily spend your money (although you don’t want to if you’re saving for a down payment) while taking advantage of higher interest rates.
• Certificate of deposit (CD): CDs are fixed-rate savings products with fixed terms. So, unlike a savings or a money market account that features variable rates, CDs come with the promise that you’ll earn a set return until the maturity date arrives. Keep in mind your timeline, however. You wouldn’t want to put your savings into an 18-month CD if you’re planning on buying in the next year, for instance, because you’d likely pay a penalty for taking out your money early. If you have a few years before you plan to buy, you might consider doing a CD ladder to account for changing interest rates and avoid being tied into a single, long-term CD.

2. Automate your savings

With this approach, you’ll set up automated deposits of a portion of your income into an account for your down payment. For employees with a directly-deposited regular paycheck, you can have your employer transfer a percentage of your paycheck to your down payment account on payday. For freelancers, contractors or business owners, you can schedule a regular, automatic transfer to your down payment account.

3. Explore additional sources of income

If you have the spare time and effort, another income source or a side hustle can help you save for a down payment. You might even be able to turn a hobby into a way to make money.

4. Look for down payment assistance programs

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 various forms, from deferred or forgivable loans to grants. Each program has different eligibility requirements, usually based on income and location. Start your search with your area’s local or state housing authority to see if you qualify.

5. Reduce your expenses

If you’re saving for a house, cutting back on your spending can help. Start with cutting unnecessary expenses, like subscription services, entertainment, delivery services or eating out. If possible, negotiate down recurring monthly or annual expenses, such as getting a better car insurance rate or reducing an internet bill. In addition, reducing as much of your outstanding debt as possible can also help you accelerate savings for a down payment. With less debt, you can redirect money to your down payment fund.

While not an option for everyone, if you’re able to, moving back into your parents’ house or moving in with a roommate can help you save for a down payment, as well. Nearly one-quarter (24 percent) of aspiring homeowners willing to do something to find more affordable housing would take this step, according to our 2025 Home Affordability Report.

6. Request a raise

While each company’s financial situation and performance measures vary, you might be able to get paid more, especially if you have made valuable contributions recently. Come to the discussion prepared, outlining the work you’ve done and how it’s impacted the company’s bottom line.

7. Ask for a gift

Many first-time homebuyers have turned to family members for help with a down payment. If a family member or friend is willing to give you some funds for your home, be sure to document this in a gift letter for your lender.

8. Reprioritize your savings goals

Your down payment isn’t the only reason you’re stashing money away. As you think about trying to buy a home, it’s important to take a holistic look at your finances. If you’re young and you have been regularly contributing to a 401(k) and/or an IRA, you might consider reducing those contributions temporarily to help boost your savings for a home purchase. Just remember to restart those full contributions once you move in.

There are pieces of your savings strategy, however, that should not be touched. Your emergency fund should remain intact. Once you buy a home, you’ll need that extra cushion to deal with the routine maintenance and repairs that come with being a homeowner.

How long should you plan to save for a down payment?

How long you should save for a down payment depends on how much money you’re putting down and how much you can set aside. When saving for a house, it’s important to remember that location plays a big role. A 10 percent down payment on a house in San Jose, California, is going to be larger than the same house in Jackson, Mississippi.

Timing is another important factor when saving for a house. You might opt to put less money down and take a higher interest rate in exchange for owning a home sooner.

To see how much your down payment will affect your monthly mortgage payment, run the numbers with our mortgage down payment calculator. You can also see how varying interest rates will affect your monthly payment.

Other costs to save for when buying a home

How to come up with a down payment may be the biggest question mark on your mind right now, but there are other expenses you need to factor in before you begin hunting for a home, including:

• ​​Closing costs: Closing costs might include an origination fee, title fee, appraisal fee and more. These typically cost 2 to 5 percent of your mortgage’s principal amount.
• Mortgage reserves: Depending on your credit or financial situation, your lender might require you to have several months’ worth of mortgage payments in reserves.
• Maintenance and other hidden expenses: The typical single-family home costs more than $18,000 a year in costs like maintenance, repairs, homeowners insurance, property taxes and calbe and energy bills, according to Bankrate’s 2024 Hidden Costs of Homeownership Study.
• Moving expenses: Depending on the distance and amount of stuff you’re moving, the costs can add up.
• Emergencies: When you own a home, it’s especially important to have an emergency fund. This is money you’ve set aside in case something unexpected happens, like job loss, your furnace goes out or you get injured. Ideally, an emergency fund will cover your bills for several months.

• Methodology
  

  For Bankrate’s Home Affordability Report:

  The survey on down payments was conducted by YouGov Plc. between Jan. 15-17, 2025. Total sample size was 2,408 adults, of which 1,270 were homeowners. Fieldwork was undertaken between April 15-17, 2024. The survey was carried out online. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

  The survey on homeownership and the American Dream was conducted by YouGov Plc. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,317 adults. Fieldwork was undertaken between March 6-8, 2024. The survey was carried out online. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

  For Bankrate’s Hidden Costs of Homeownership Study:

  Bankrate’s Hidden Costs of Homeownership Study analyzes the average annual expenses associated with owning and maintaining a single-family home nationwide and in every state in 2024 compared to 2020. Bankrate defines those expenses as costs that go beyond a mortgage, including property taxes, homeowners insurance, energy costs, internet and cable bills and home maintenance.Average annual nationwide and statewide home maintenance costs were estimated using the 2 percent rule of thumb multiplied by national and statewide median sale prices for single-family homes as of March 2020 and March 2024. Bankrate accessed Redfin’s national and statewide median sale price data for single-family homes as of March 2020 and March 2024 on May 1, 2024. Average annual national and statewide electric bills, which include electricity, natural gas, propane and fuel oil or kerosene costs, were collected using 2020 data from the U.S. Energy Information Administration. Average annual national and statewide internet and cable bills were collected using 2021 and 2023 data from bill payment company Doxo. Average annual national and statewide property taxes were collected using 2020 and 2022 data from ATTOM, a provider of nationwide property data. Bankrate used national and statewide 2020 and 2021 data from the National Association of Insurance Commissioners (NAIC) to aggregate average annual homeowners insurance premiums.To accurately determine hidden homeownership expenses in 2024, Bankrate adjusted the most up-to-date national and statewide figures for property taxes, energy costs, internet and cable bills and homeowners insurance premiums for inflation using the Consumer Price Index. In the 2020 portion of the analysis, national and statewide 2021 figures for internet and cable were converted to 2020 dollars using the Consumer Price Index. Bankrate’s study did not include mortgage payments or any other monthly expenses or debts.