How to Save For a Down Payment for a House

Photo to accompany article on how to save for a house

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For years, Jen Hayes believed homeownership was unattainable.

“Honestly, I didn’t think I could ever get a house,” the 46-year-old teacher and single mom says of the expensive area of Southern California where she lives.

But through a combination of what she calls “radical saving” and the help of local and state first-time homebuyer programs, she was able to purchase her first home, give her two kids their own rooms, and develop a savings habit that continues to provide flexibility and financial security today.

You should be in the best possible financial position when you meet with your mortgage lender. That means taking time to build a savings cushion and develop a financial plan before your home search begins. And while it may take years, stay mindful of your goal throughout the entire saving process.

“The only thing I regret is having that mindset of thinking that I can’t get a house because I’m a single mom,” Hayes says. “I was mistaken. Maybe I would have gotten a house sooner if I hadn’t been stuck in that way of thinking, but I’m so glad I got out of it. And I got my house.”

Here are a few ways to get started saving for your house today: 

Determine Your Timeline—And Think Long-Term

Today’s low mortgage rates may be tempting for prospective homeowners, but homebuying is a decision you never want to rush into. 

Hayes says she spent years saving toward her goal, especially knowing how competitive the market in her area is. “It’s a long-term thing. You have to have that mindset, sometimes for years, that you’re saving for a house.”

A lot of people, whether they’re looking to take advantage of great rates or otherwise, might get the idea in their head to buy a home and want to rush the process, says Charles Ho, CFP and founder of Legacy Builders Financial in Folsom, California. 

“Instead of focusing on owning a home, think more about whether this home is going to fit the lifestyle that you want in three years, five years, 10 years.”

Determine your broader long-term financial goals, then see how homeownership might fit into those goals. Ask yourself: “What can we afford while meeting our cash flow, savings goals, and other areas important to us such as retirement and college funding?” Ho says.

Set a Savings Goal

If your goal is to own a home within a few years or the next decade, you may not know exactly what your financial situation will look like when it’s time to close, or even what your price range should be.

Do some research on the area you’d like to live and homes you’d like to buy to determine a price range. Will you need to move farther away or downsize to stay within your budget? Consider what compromises you’re willing to make.

Start looking into homebuying programs you may qualify for as well. These programs and grants often have income restrictions and credit score requirements, or are location-based, so it’s smart to get an idea of those you may already qualify for and others you may want to work toward.

Your down payment will likely be your biggest upfront cost, so you should have an idea of how much you’ll need to put down, whether it’s a standard 20% or taking on private mortgage insurance and paying less upfront. You may be working with estimates, but having a number in mind can help you develop a plan.

Also keep in mind what you can actually afford on an ongoing basis. Use a mortgage calculator to determine how much home you can afford based on the monthly payments you’re able to make.

Planning how much you can afford upfront will save you the stress and possible consequences of taking on more than you can handle when it’s time to make the purchase.

“People fall in love with a house, and then will do anything they can to jam themselves into that house,” says Megan Donnelly, CFP and founder of Quabbin Advisors, a virtual financial planning firm. “Frequently, they’re coming right up against their monthly budget each and every month, and the stress and anxiety is not worth it.”

Pro Tip

Don’t rush the process. It’s better to rent for a bit longer and enter the homebuying process with a strong savings safety net than rush into buying a house that could become a financial headache later on.

Account for Ongoing Costs

“When shopping for a home, a lot of people just look at a purchase price, and then they work backwards from there,” Ho says.

But there are extra expenditures to consider as well, which can increase your costs after becoming a homeowner. Expect property taxes and insurance costs, which may be wrapped into your mortgage payment, but also account for increased utilities, moving costs, furniture, landscaping, and remodeling projects.

And don’t forget the annual maintenance costs you’ll incur for your home’s upkeep, too. Set aside some cash for ongoing or unexpected costs like HVAC replacement or a leaky roof. Some years will require more costly maintenance than others, but you’ll want that reserve to rely on, Donnelly says. She recommends saving 1% of your home’s value toward maintenance costs annually.


A budget can make all the difference when it comes to meeting your savings goal.

Working toward her goal on a single income, Hayes knew she had to practice strict budgeting; she began directing half of her income each month toward savings.

“Since I had been thinking about buying a house, I was just focused on saving all the time,” Hayes says. “There were a lot of things we said no to in order to keep saving.”

Both Ho and Donnelly recommend committing some time early on to doing the dirty work—gather your bank and credit card statements from the past several months and get a realistic picture of the money you bring in versus the money you spend. Pull your own credit reports too, so you can fix any mistakes or begin working on increasing your score

Then, start tracking every dollar. Become more intentional about where your money goes. Put your money into savings when it comes in, before you have a chance to spend it, rather than saving what’s leftover at the end of each month.

“It usually ends up being a few years where it’s not fun to watch your budget that closely and watch your credit reports that closely, but it can really set you up for success,” Donnelly says.

Open a Dedicated Account

When you begin saving, open an account you can use to automate savings each month or pay period based on your savings goal and timeline. 

Consider a high-yield savings account with an online bank that’s different from where you do your regular banking. Then, you can set it and forget it with automatic transfers to keep your funds growing each month and ensure your money is safe.

“If somebody is really saving hard for a near-term goal, especially in this environment, I would say just put it in a high-yield savings,” Donnelly says. “I think online savings are a great tool; they give you flexibility with a little bit of income. If you want to reach that goal in a couple years, don’t mess around.”

Keep Your Goal in Sight

Becoming a homeowner doesn’t happen overnight, especially for first-time homebuyers, and saving toward a large goal can feel overwhelming. Make sure you recognize your wins along the way.

“Once you make a change to start advancing toward a larger goal and you see success with that, it’s going to start instilling the discipline and the habit,” Donnelly says. “It’s the little victories that behaviorally get you to your larger, more important goal.”

Stay disciplined, too. Make things simple through automation, continue to monitor your credit report and your monthly spending, and keep an eye on your area’s market and whether your savings goal continues to align with what’s available. 

“It really comes down to discipline and making sure that our financial habits are aligned with our long-term goals,” Ho says.