Many or all companies we feature compensate us. Compensation and editorial research influence how products appear on a page. Mortgages How to Save Enough Money to Finally Buy a Home: Down Payment and Beyond Updated Nov 24, 2025 10-min read Written by Taylor Milam-Samuel Written by Taylor Milam-Samuel Expertise: Student loans, debt, budgeting, tax relief, home equity, personal loans, auto loans Taylor Milam-Samuel is a personal finance writer and credentialed educator who is passionate about helping people take control of their finances and create a life they love. When she's not researching financial terms and conditions, she can be found in the classroom teaching. Learn more about Taylor Milam-Samuel Edited by Kristen Barrett, MAT Edited by Kristen Barrett, MAT Expertise: Student loans, mortgages, personal loans, home equity, investing Kristen Barrett is a managing editor at LendEDU. She lives in Cincinnati, Ohio, with her wife and their three senior rescue dogs. She has edited and written personal finance content since 2015. Learn more about Kristen Barrett, MAT When it comes to buying a home, saving for the down payment gets the most attention. It’s a massive part of the purchase, but it’s not the only expense. That’s why we suggest looking at the big picture: before, during, and after you close. Our step-by-step guide explains how to save money for a house, along with what costs to expect after you sign the last piece of paperwork. Table of Contents How to start saving for a house How to save for a down payment Earnest money Plan ahead for 1% Furniture Necessary home updates Cosmetic home updates How to save for a house in 2 years Stage 1: Get your finances ready Stage 2: Set your savings target Stage 3: Save strategically Stage 4: Prepare for costs after you move in Tips for saving for a house How to get a deposit quickly What if I can’t save 20%? How to start saving for a house A mortgage is the loan you use to buy your home. You might have heard that you need a 20% down payment, but that’s not usually true. Sure, 20% down can help you avoid private mortgage insurance (PMI), but it’s not required. Start with a plan So is now a good time to buy a house? The truth is, it depends more on your finances than on the market. The best way to save for a house is by working backward: Once you know the type of mortgage you need, it’s easier to figure out your estimated costs. How to save for a down payment The down payment is the biggest chunk of money you need to save for a home purchase. The exact amount you need depends on your mortgage lender and purchase price. Here’s a look at how much you might need for a $400,000 home with different mortgages. Type of mortgageCostSample for $400K houseConventional5% – 20%$20K – $80KFHA3.5%$14KVA0%$0USDA0%$0 Homebuying comes with many terms and insider language that only lenders use. Our mortgage terms glossary can help you stay in the loop and feel ready for those conversations. Earnest money Earnest money is the first big payment you’ll make when you buy a home, typically 1% to 3% of the purchase price. It’s due after the seller accepts your offer. You don’t need to save it; the money goes toward your down payment and other closing costs. But you need to be prepared to spend it earlier in the process. Closing costs Closing costs are the next largest expense, and they add up fast. Some of the fees are usually due throughout the buying process. You can expect to pay an extra 2% to 5% of the purchase price toward closing costs. For a $400,000 home, the costs might range from $8,000 to $20,000. You might be able to roll your closing costs into your loan, so check with your lender if that sounds like a good option for you. Let’s take a look at some typical closing costs you might encounter. Typical expensesAverage cost Sample for $400K houseHome inspection$300 – $500$300 – $500Appraisal fee$400$400Origination fee1%$4KEscrow fee1%$4KHomeowners association transfer fees$200$200Title insurance$500 – $3,000$500 – $3.5KAgent’s commission (negotiable)2.5% – 3.0%$10K – $12KNotary fee$100$100Recording fee$50$50 Ongoing costs You might not need to save for ongoing costs in advance, but it’s a good idea to plan ahead so your income can support these new expenses. Plan ahead for 1% Most experts suggest saving 1% of your house purchase price per year for ongoing expenses. For example, your goal might be to save $333 per month for a $400,000 home. Some homeowners report that their ongoing costs are even higher than 1%, though. Typical monthly costs of owning a home byu/curiosityjunkieee inFirstTimeHomeBuyer A Redditor in the thread above states, “My 500K Townhome Annual Costs are closer to 2% … $2300 Prop Tax $2800 HOA $600 Condo Insurance $3000 Utilities (Trash, Sewer, Water, Electric) $35 Smart Home System $5000 Repairs & Maintenance.” Here’s a look at some typical expenses so you can begin to prepare. Typical expensesAverage annual costCost for $400K houseProperty taxes0.32% – 1.83%$1,280 – $7,320Maintenance 0.5% – 1.0%$2K – $4KHome insurance$1,090.08 – $3,353.74 $1,090.08 – $3,353.74 HOA fees$200$200Water, trash, electric$2.2K$2.2K Other costs to consider after closing Some of these expenses can wait a year or two, but you might need to tackle others right away. It really depends on the condition of your home, what you currently own, and the home inspection report. Here’s a look at common costs that pop up after closing on your home and moving in. Furniture Your previous home and the current amount of furniture you own determines how much you need to spend. If you’re downsizing, you might not need to buy anything. But if this is your first home, you might need multiple big-ticket items. Average cost: $4,000 per room It takes time to learn the quirks of a home and how you’ll use the space. Focus on creating a comfortable and usable home for you and your family that you can continue to change over time. How much should we save to furnish a whole house? byu/cool_kat_ inFirstTimeHomeBuyer Necessary home updates You might have to make immediate home updates for safety or comfort. The home inspection report usually flags these updates, and you can negotiate during the buying process to have the seller pay for some of the repairs. Average cost: $2,000 Cosmetic home updates Some homebuyers want to redo flooring, paint the walls, and make other cosmetic changes before moving in. These projects are often easier to complete when the house is empty. Save ahead of time if you want to tackle some projects before moving day. Average cost: $0 – $10,000 How to save for a house in 2 years Ready to buy a new home in a couple of years? Here’s exactly how to make it happen. Stage 1: Get your finances ready Start by requesting a copy of your credit report and score, and make a plan to maintain or increase your score. Your credit score determines how much it costs to borrow money for a home. The higher your score, the cheaper your loan. Don’t pay just to view your credit score. Credit Karma, Credit Sesame, and many banks and credit card issuers provide this information for free. You can also check with the three major credit buraus. Next, take a look at your savings, income, investments, and gifts. Figure out if you already have any money to use for your home purchase. But don’t panic if you’re starting from zero. Stage 2: Set your savings target Meet with a mortgage lender to get an idea of how much house you can afford. (This is not likely to be the maximum amount you’re approved for; it should be a realistic number based on your current income and debt.) Once you have the amount, calculate how much you need to save. For example, let’s say you meet with a lender and decide that you can afford a $250,000 home with a conventional mortgage. Calculate how much you need for closing costs ($5,000 to $12,500) and a down payment ($12,500). Now you have your savings goal: $17,500. Consider opening a high-yield savings account so you can earn interest on your money as you save. Stage 3: Save strategically Once you know the numbers, you can set a monthly savings goal and start working toward it. For example, you need to save $729 per month for the example above. You can attack the goal from two sides: Cut back on expenses while also picking up extra work or asking for a raise. Stage 4: Prepare for costs after you move in Consider your move-in costs. Whether it’s from a tax refund, promotion, extra paycheck, or birthday gift, try to set aside some extra money for these expenses. Tips for saving for a house Remember: Every dollar counts. Even if you can’t hit the exact savings goal every month, you’re getting closer. Saving for a large financial goal without external help is a huge undertaking. Try to cut yourself some slack as you save, especially if you’re working on it alone. How to get a deposit quickly Most standard money advice involves some element of luck, and it’s not always possible to save a deposit super fast. These ideas can help you get started, though. Ask for a raise, and keep your spending the same. Save your entire tax refund. Implement a spending ban and only buy necessities. Don’t travel for a couple of years. Postpone expensive events like weddings and parties. Ask family members for help or a temporary loan. Pick up a side gig you can work part-time. What if I can’t save 20%? It’s not always possible to save 20% for a down payment. But you also don’t need to. Most conventional mortgages require a minimum down payment of 5%. Other mortgages, like the VA loan, require even less. Down payment assistance Look for down payment assistance programs. You can start the search at Down Payment Resource. Lower down payment mortgages Consider applying for mortgages that have lower down payment requirements. For example, Fannie Mae offers a mortgage for first-time buyers that requires only 3% down. Co-buying It a 3% down payment be easier to afford a home if you co-buy with a friend or family member. It’s not the right option for everyone, but it works for some people. Pause other financial goals You might need to pause other savings goals while you focus on buying a home. Some homebuyers report taking a break from other savings (including retirement!) when preparing for a house purchase: Would you stop/slow down retirement contributions to have more money for a home purchase? byu/np1050 inFirstTimeHomeBuyer Article sources At LendEDU, our writers and editors rely on primary sources, such as government data and websites, industry reports and whitepapers, and interviews with experts and company representatives. We also reference reputable company websites and research from established publishers. This approach allows us to produce content that is accurate, unbiased, and supported by reliable evidence. Read more about our editorial standards. Consumer Financial Protection Bureau, Conventional Loans Consumer Financial Protection Bureau, Understand the Different Type of Loans Available Down Payment Resource, Buying a Home Fannie Mae, 97% Loan to Value Options U.S. Department of Housing and Urban Development, How Can FHA Help Me Buy a Home? U.S. Department of Veterans Affairs, Purchase Loan U.S. Department of Agriculture, Single Family Housing Direct Loans Zillow, Can Closing Costs Be Rolled Into Your Mortgage? National Association of Realtors, Home Inspections Zillow, Home Appraisal Cost Realtor, Who Pays the Real Estate Commission and Closing Costs: The Homebuyer or Seller? Tax Foundation, Property Taxes by State and County 2025 Progressive, How Much Does Homeowners Insurance Cost? United States Census Bureau, American Housing Survey Energy Star, Home Improvement About our contributors Written by Taylor Milam-Samuel Taylor Milam-Samuel is a personal finance writer and credentialed educator who is passionate about helping people take control of their finances and create a life they love. When she's not researching financial terms and conditions, she can be found in the classroom teaching. Edited by Kristen Barrett, MAT Kristen Barrett is a managing editor at LendEDU. She lives in Cincinnati, Ohio, with her wife and their three senior rescue dogs. She has edited and written personal finance content since 2015.