How to Save for a House: 5 Tips to Build Your Down Payment Faster

Whether you're a first-time buyer or looking to move, saving for a house may feel like a big challenge, but it’s not impossible. With a clear savings goal, smart budgeting, and a few simple strategies, you could move closer to homeownership, one step at a time.

This guide breaks down exactly how to save money for a house, from setting your target down payment to cutting costs and potentially grow your savings. You'll also find practical tips to keep your budget on track without feeling overwhelmed.

1. Set a Clear Down Payment Goal

What is a down payment for a house?

A house down payment is the upfront portion of the purchase price paid at closing, usually a percentage. A bigger down payment may help reduce monthly mortgage and potentially eliminate private mortgage insurance (PMI).

Here are some things you can do to help set a down payment goal for a house:

Research Average Home Prices in Your Area

Home prices vary widely depending on the city, neighborhood, and size of the property. Look up listings in your preferred area to get a sense of what homes are selling for. This gives you a realistic starting point for your savings goal.

Know How Much a Down Payment for a House Typically is

The typical cost of a down payment for a house ranges from 3% to 20% of the home’s purchase price.¹ The exact percentage depends on the type of mortgage loan you use and your financial situation.

For example: A 10% down payment on a $300,000 home would mean saving $30,000 for a down payment.

Factor in Additional Homebuying Costs

Beyond the down payment, there are other upfront expenses to plan for. These may include:

• Closing costs (typically 3% to 6% of the loan amount)
• Moving expenses
• Home inspections or repairs
• Emergency savings fund for surprise maintenance after move-in 

Understand Why Your Credit Score and Interest Rate Matter

Your credit score plays a big role in determining the interest rate you’ll qualify for on a mortgage. A higher score may help you get a lower mortgage interest rate, which typically means a lower monthly mortgage payment. If your score is lower, you may still be eligible for some types of loans, like FHA loans, but you could pay more over time.

2. Create a Dedicated Savings Account & Automate It

Keeping your home savings separate from your everyday spending can help you stay focused. Avoid accidentally dipping into it.

Calculate Your Monthly Savings Goal

Start with this simple formula: Monthly Savings Goal = Total Savings Needed ÷ Months Until Purchase

Example: If you want to save $30,000 in five years (60 months), you’d need to save about $500 a month.

Use the Right Account to Grow Your Money

Open a high-yield savings account or a money market account. These are both interest-bearing accounts that can help your money grow faster than a regular checking or savings account.

Benefits include:

• Higher interest rates than traditional banks
• Easy access to your money when you’re ready to buy
• Low risk and FDIC insurance can help provide financial security

Automate Your Savings

Automating your deposits into a high-yield savings account or interest-bearing savings account makes it easier to stick to your house savings plan.

Once your account is set up:

• Schedule automatic transfers right after payday, so you "pay yourself first"
• Treat it like a non-negotiable bill
• Give your account a fun or meaningful name like “Future Home Fund” or “My Down Payment” to stay motivated

3. Track Your Spending & Cut Back Where You Can

Saving faster doesn’t always mean earning more, it can also mean spending less and making sure you stay within your personal budget. Here are basic steps you can take to get a clear picture:

1. Start by reviewing your monthly income and expenses
2. List your fixed costs (like rent, utilities, and minimum debt payments).
3. Look at where your discretionary money goes (subscriptions, eating out, shopping).
4. Cut or reduce anything non-essential, even temporarily.
5. Review credit card statements regularly to identify hidden costs or auto renewing-subscriptions 

Now, you may be able to redirect those savings directly into your home fund.

 Find out where you could cut costs and boost your savings. Get My Free Financial Review 

4. Understand Mortgage Basics & Plan Ahead

In addition to saving for a down payment, you’ll also want to prepare for what comes next. Here are key mortgage terms and steps to think through as you plan your path to homeownership.

Explore Your Loan Options

Different types of mortgage loans may work better depending on your financial situation. Each mortgage loan type requires different down payments, depending on whether the home is your main residence, a second home, or a rental property.¹ 

Let's say, you’re buying your first home to live in full-time (primary home). The house costs $250,000. You’re applying for an FHA loan, which generally requires a minimum down payment of 3.5% of the house price. Here is what the calculations might look like:

• Required Down payment: 3.5% of $250,000 = $8,750
• Amount Financed Through Loan: $250,000 – $8,750 = $241,250 (not including closing costs and other fees)

Use this table to compare the minimum down payments required for each loan type based on how the property will be used.

Talk to Mortgage Lenders About Preapproval

Before you start house shopping, consider getting mortgage preapproval. This helps you:

• Understand how much house you can afford
• Show sellers that you're a serious buyer
• Spot any issues in your credit history early

Know Your Interest Rate & Credit Impact

Your mortgage interest rate affects how much you’ll pay over time. Even a small change in rate can make a big difference in your monthly payments and total loan cost. Rates are typically based on:

• Current interest rates in the market
• Your personal financial profile, including credit score, income, and debt 

5. Choose Smart Tools to Grow Your Savings

If you're planning to buy a home a few years down the road, your savings could potentially earn more with the right tools and investment strategies, without taking on too much risk.

Smart Options to Consider

High-Yield Savings Accounts
A high-yield savings account is one of the safest places to keep your money while earning more interest than a regular savings account. These accounts are usually offered by online banks and are easy to access when you're ready to buy.

• Great for short- to mid-term savings
• FDIC-insured and low risk
• Keeps your money separate and growing

Certificates of Deposit (CDs)
A Certificate of Deposit (CD) lets you lock in your money for a set period—usually 6 to 12 months—in exchange for a higher interest rate.

• Ideal if you won’t need immediate access
• Works well for fixed-term goals like saving for a house
• Watch for early withdrawal penalties

Low-Risk Investment Accounts
If your savings timeline is longer (3+ years), a conservative investment account may offer more growth potential than a standard interest-bearing account.

• Look for portfolios focused on bonds, treasury securities, or diversified funds
• Often available through robo-advisors or brokerage firms
• Consider options with low fees and minimal volatility

Final Thoughts

Saving for a house isn’t just about cutting back. It’s about building momentum through consistent habits. Whether you’re putting away $50 or $500 a month, what matters most is staying committed and adjusting as life changes. 

If you’re unsure where to start or how much you’ll need, a financial professional may help you create a plan that fits your goals and timeline.

 Plan your next move toward homeownership. Get My Free Financial Review 

Sources

1. Zillow. "How Much Is a Down Payment on a House?" https://www.zillow.com/learn/down-payment-on-a-house/
2. National Association of Home Builders. "Nearly 60% of U.S. Households Unable to Afford a $300K Home" https://www.zillow.com/learn/down-payment-on-a-house/
3. Realtor.com. "Down Payments Continue Upward, Hitting a Q4 Peak" https://www.realtor.com/research/down-payment-report-march-2025/