How to Save for a Down Payment on a House

Saving for a down payment can feel like the biggest hurdle between you and a home of your own. Here's some reassuring news: you probably need less than you think. 

The belief that you have to put 20% down is one of the most common homebuying myths. In 2025, first-time buyers put down a median of just 10%, and several loan programs let you start with even less. 

This guide breaks down how to save for a down payment on a house, including how much you really need, where to keep your money while you save, and how to make saving automatic so you can reach your goal without stressing over every dollar. 

For the full homebuying picture, our guide on what to expect when you buy a home walks through the rest of the process.

How much do you really need for a down payment

You don't need 20% down to buy a house. Among all buyers in 2025, the median down payment was 19%, but first-time buyers put down a median of just 10%, and repeat buyers a median of 23%.1 Some loans go much lower, allowing as little as 3% or even 0% down for buyers who qualify.

So where did the 20% rule come from? 20% is the point at which you can usually avoid private mortgage insurance on a conventional loan, which is why it gets treated as the standard. But it has never been a requirement. There’s many people who buy a home for less.

Here's how minimum down payments compare by loan type.

Down payment minimums by loan type

Calculations were done based on the national rates and rate caps from the FDIC

Putting down less than 20% on a conventional loan usually means paying private mortgage insurance, or PMI. This is an added cost that protects your lender, not you, if you stop making payments, and you can usually have it removed once you reach about 20% equity in your home. 

PMI is usually a relatively small addition to your monthly payment, so a smaller down payment can be a smart way to buy sooner rather than wait years to reach 20%.

The takeaway: waiting until you have a full 20% saved isn't required to buy a home. A smaller down payment just means you'll likely pay PMI for a while, which you can cancel later as you build equity.

Set your down payment target and timeline

To set your down payment target, multiply the price of the home you want by the down payment percentage you're planning for, then divide that number by the months until you'd like to buy. The result is roughly how much to set aside each month.

Here's an example of how that looks. The national median price of an existing home, meaning half of homes sold for more and half for less, was about $429,300 as of May 2026. A 10% down payment on a home at that price comes to roughly $42,900. If you'd like to buy in three years, you'd aim to save about $1,192 a month. Want to buy sooner, or save a little less each month? Adjust the price, the percentage, or timeline.

There's one more line that's easy to forget: Closing costs. These typically run about 2% to 5% of the home's price and cover things like lender charges, title services, and escrow. On a $429,300 home, that's roughly $8,600 to $21,500 on top of your down payment, so it's worth planning and saving for.

Where to keep your down payment savings

Because a down payment is usually a near-term goal, keep the money in a high-yield savings account rather than the stock market. While the market has typically ended on an uptrend, if the market experiences a dip near the time you want to close on a home, you may not be able to keep the funds invested for the rebound. Plus, any gains you make could have tax implications.

Investing makes sense for long-term goals, so a down payment you plan to use within the next two to three years shouldn’t be done through investing. 

The point of saving for a short-term goal is stability and access. That's why a high-yield savings account is considered a better home for this money. Your balance stays steady, your cash is there when you need it, and you earn more interest than if the money was sitting in a traditional bank.

One thing worth keeping in mind: Your down payment fund should be kept separately from your emergency fund. While they are both meant for any short-term goals, they are there for different purposes. Your emergency fund acts as a safety net for any unexpected emergencies that come up, while your down payment fund is money you're setting aside specifically for a home. 

Keeping them in separate accounts makes it easy to see how much you really have for each goal, and it means an unexpected bill won't pull away from the home you’re saving for. 

Make saving automatic

The most reliable way to save for a down payment is to make it automatic, so the money moves before you can spend it. Set up a recurring transfer into your down payment savings on each payday, and treat it like any other bill.

This is also called the pay-yourself-first approach, and it works because it relieves you from manually moving the money, so you can focus on what actually hits your account.

Other ways to reach your goal faster

Free up more to save with a budget

A popular budgeting approach is the 50/30/20 budget rule, which puts 50% of your take-home pay toward needs, 30% toward wants, and 20% toward savings and paying down debt.

Trimming a few recurring subscriptions or bringing in extra income, even temporarily, can meaningfully speed up your timeline. If you'd like help splitting your money automatically across saving, spending, and investing, Acorns Money Manager, part of the Acorns Gold plan, does it for you in the background.

Look into down payment assistance and gifts

You don't have to save every dollar on your own. Many state and local governments and nonprofits offer down payment assistance, or DPA, programs and grants for eligible buyers, and gifts from family are allowed by most loan programs.

In fact, among first-time buyers in 2025, 59% used personal savings for their down payment, 26% tapped financial assets like a 401(k) or IRA, and 22% received help from a relative or friend through a gift or loan. 

To find programs near you, a good starting point is the CFPB's homebuying resources or a HUD-approved housing counselor.

Consider an IRA, carefully

First-time buyers can withdraw up to $10,000 from an individual retirement account (IRA) penalty-free to put toward a home, but it's an option to weigh, not a default. 

The reason for caution: money you pull out is money that's no longer invested for retirement, and you may still owe income tax on a traditional IRA withdrawal. 

If you're considering it, our guide on using an IRA toward a first home covers the details, but Acorns does not provide tax advice. It's worth talking to a tax professional first.

You're not behind, and you don't have to do it all at once

If saving for a home feels slow, you're not alone, and you're not behind. First-time buyers made up about 21% of the market in 2025, and the typical first-time buyer was 40 years old. 

What matters is the momentum: Setting a realistic target, putting your savings on autopilot, and keeping the money somewhere safe until you're ready. 

Start saving automatically with Acorns.

Frequently asked questions

How much down payment should I save before buying a house?

A common target is 10% of the home's price for a first-time buyer down payment, which comes to about $42,900 on a $429,300 home. You can buy with less, since some loans allow as little as 3% or 0% down for eligible buyers, but it's also smart to budget another 2% to 5% for closing costs, roughly $8,600 to $21,500. Saving for both keeps you from being caught short.

Do I really need 20% down to buy a house?

No. You don't need 20% down to buy a house. First-time buyers put down a median of 10%, and conventional loans can require as little as 3%, FHA loans 3.5%, and VA and USDA loans 0% for eligible buyers. Putting down less than 20% usually means paying private mortgage insurance, which you can cancel later as you build equity.

Where should I keep my down payment savings?

Keep your down payment savings in a high-yield savings account, not the stock market. Because you'll likely need the money within a few years, you want stability and easy access rather than the ups and downs of investing. A high-yield account keeps your balance steady while still earning interest.

How long does it take to save for a down payment?

It depends on your target and how much you can set aside each month. To estimate your timeline, divide your down payment goal by the amount you can save monthly. For example, saving about $1,192 a month would get you to a $42,900 down payment in roughly three years. Automating your savings helps you stay on track.

Can I use my retirement savings for a down payment?

You can, but consider it carefully. First-time buyers can withdraw up to $10,000 from an IRA penalty-free for a home purchase, though you may still owe income tax on a traditional IRA withdrawal, and the money is no longer invested for retirement. It's an option worth discussing with a tax professional, not a first choice.

What is PMI, and how do I avoid it?

Private mortgage insurance (PMI) is an added cost you usually pay on a conventional loan when you put down less than 20%, and it protects your lender if you stop making payments. You can avoid PMI by putting down 20%, or you can pay it for a while and cancel it once you reach about 20% equity in your home. Some loans, like VA loans, don't require it at all.