How to save for a down payment

Written by

Allison Martin,

Edited by

Alice Holbrook,

Reviewed by

Erin Lowry,

Expert verified

Published on August 13, 2025 | 5 min read

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A piggy bank, a model of a house, a stack of coins and two keyrings.

Key takeaways

There are many strategies to save for a down payment, including maximizing your savings, reducing everyday expenses and applying for down payment assistance.
You don’t have to save 20 percent for a down payment on a home. Conventional mortgages require just 3 percent down, and FHA loans require only 3.5 percent down.
More than half (52 percent) of aspiring homeowners cite the down payment and closing costs as a “very significant” obstacle to homeownership, according to a Bankrate survey.

More than half (52 percent) of aspiring homeowners cite the down payment and closing costs as a “very significant” obstacle to homeownership, according to Bankrate’s 2025 Home Affordability Report.

Here are our top ways to save for a down payment, advice on how much to put down and a rundown of other costs to consider.

How much do you need for a down payment?

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

Loan type	Minimum down payment	Minimum credit score	Mortgage insurance
Conventional loan	3%	620	Private mortgage insurance with a down payment of less than 20%
FHA loans	3.5% for credit scores 580 and up/10% for credit scores 500-579	580/500	FHA mortgage insurance with a down payment of less than 20%
VA loan	None	Varies by lender, but generally 620	None
USDA loan	None	Varies by lender, but generally 640	None
Jumbo loan	10%-20%	Varies by lender, but often 700	Varies by lender

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 a record-setting $435,300 in June, according to the National Association of Realtors (NAR), the home price you can expect to find varies by region and even metro area. For example, the median home price in the West in June was $636,100, but the median in the Midwest was $337,600, and the median home price in Detroit was $293,900.

Once you’ve decided how much home you can afford, you can start deciding how much to put down on your house and making a savings plan for your down payment.

What's the typical down payment on a home?

The median down payment for all homebuyers is 18 percent, according to the National Association of Realtors. First-time homebuyers make a median down payment of 9 percent.

Learn more: How much should you put down on your house?

How to save for a down payment: 8 ways

There are several ways to save for a house:

1. Park the savings in a high-yield account

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 4 percent APY on deposits. If your money is currently stashed in an account that pays minimal interest, think about moving it to a:

High-yield savings account: High-yield savings accounts offer significantly higher earning potential than standard savings accounts. Some currently pay between 4 and 5 percent, as opposed to 0.01 percent at some big-name banks.
Money market account: Money market accounts are a cross between a checking and savings account that may offer higher rates than standard savings accounts.
Certificate of deposit (CD): CDs are fixed-rate savings products with fixed terms. You make a deposit and earn a set return until the maturity date arrives. But before signing up for a CD, keep your homebuying timeline in mind. If you’re planning to buy in the next year, and you put your savings in an 18-month CD, you’ll likely pay a penalty for withdrawing the money early. On the other hand, if you have a few years before you plan to buy, 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 regular paycheck, you can ask your employer to split your direct deposits between your down payment and other accounts. 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 energy, 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 money-making proposition.

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.

5. Reduce your expenses

If you’re saving for a house, cutting back on your spending can help. Here’s how:

Lower discretionary spending. These are expenses like subscription services, entertainment, delivery services or eating out. While you won’t want to cut out this spending entirely, consider ways to spend less.
Save money on your bills. If possible, negotiate recurring monthly or annual expenses, such as shopping around for a better rate on car insurance or reducing an internet bill.
Pay down 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 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’ve made valuable contributions at work recently. Come to the discussion prepared, outlining the work you’ve done and how it 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 buying a home, take a holistic look at your finances. If you’re young, and you regularly contribute to a 401(k) or an IRA, consider reducing those contributions temporarily and saving more for your home purchase. Just remember to save enough to qualify for your company match, if you have one — and resume your former contributions once you’ve met your down payment savings goal.

Don't forget your emergency fund

It’s important to keep your down payment savings separate from your emergency fund, which should contain three to six months of living expenses. Unless you have much more in this account than you need, it shouldn’t fund your down payment. 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 each month. Location plays a big role in your savings goal. A 10 percent down payment on a house in San Jose, California, is going to be larger than one for 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 pay a higher mortgage 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.

Other costs to save for when buying a home

While the down payment is the biggest homebuying expense for most people, there are other costs you need to factor in, including:

Closing costs: Closing costs might include an origination fee, title insurance 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 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.

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. 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.

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