How To Save for a Home Down Payment
Buying a home starts with saving, and for many, the down payment is the biggest hurdle. This guide explains how to begin building your savings, how much you might need, and how to stay motivated along the way.
How Much Should You Save for a Down Payment?
The traditional benchmark for a home down payment is 20% of the purchase price, but many first-time buyers put down less, typically between 3% and 5%. One way to estimate your target is by using a down payment calculator to figure out how much you can afford, then setting a realistic savings goal based on that amount.
Paying more upfront can lower your loan amount, reducing your monthly mortgage payment and the total interest paid over time. A higher down payment may also help you avoid private mortgage insurance (PMI)—an added monthly cost usually required when you borrow more than 80% of a home’s value.
Down payment requirements vary by loan type, and there are assistance programs available, so speak with a lender to find out what programs you qualify for and how much you’ll need to save.
Six Tips to Start Saving for a Down Payment
Saving for a home down payment doesn’t have to be difficult. Here are six strategies to help you build your savings over time:
1 | Set a monthly savings goal and automate it
Choose an amount you can comfortably set aside each month and schedule automatic transfers from your checking to a dedicated savings account.
2 | Open a “house fund”
Keep your down payment money separate from your everyday account to safeguard it for its intended purpose. A Special Purpose or Club Account can make it easier to reach your goal.
3 | Consider a Money Market or Term Share Account
If you're not planning to buy right away, earn more by placing your savings in a Money Market Share Account or Term Share Certificate. These accounts offer higher dividend rates than traditional deposit accounts while keeping your money secure.
4 | Cut non-essential expenses
Trim everyday spending like subscriptions, takeout, or impulse purchases. Even small cuts—redirecting $50 to $100 each month—can add up over time.
5 | Use windfalls to boost your fund
Tax refunds, bonuses, or wedding gifts can give your down payment savings an instant lift. Set aside a portion before spending the rest.
6 | Revisit and adjust as needed
When life changes, so should your plan. Review your budget and savings regularly to stay aligned with your timeline and goals.
Why Saving for a Down Payment Is Worth It
Saving for a house down payment takes discipline, but well worth it as the benefits can really add up.
- Smaller loan = lower monthly mortgage payments
- Less interest paid over time
- Potential to avoid PMI
- Stronger purchase offers in competitive markets
- Builds healthy financial habits that can carry into homeownership
Even if you're not ready to buy today, saving now gives you more flexibility and buying power when the time comes. Even small steps to maximize your savings can make a big difference. The more you set aside, the more control you’ll have over your loan options.
At Heritage Family Credit Union, we offer tools, resources, and personalized support to help first-time buyers prepare for homeownership with confidence.
Connect with a mortgage specialist to explore your options and get personalized guidance on how much to save for your down payment.