How Much to Save for a House Down Payment (2026)

How big does it need to be?

There is no single right down payment. The trade off is simple: less money down means a smaller upfront hurdle but PMI and a bigger loan; more money down means a larger cash requirement but a lower payment and no PMI.

3 to 5 percent. The minimum on many conventional and FHA loans. Lowest barrier, but you pay PMI or MIP.
10 percent. A middle ground that shrinks the loan and the PMI premium.
20 percent. Removes PMI entirely and gets the best pricing. The classic target.

Do not forget closing costs, which are due at the same time and are separate from the down payment.

The monthly plan to reach it

Once you know the number and your timeline, the monthly amount is straightforward, and a high yield savings account does some of the work for you.

Worked example: 20 percent on a $350,000 home

Target down payment$70,000
Timeline4 years (48 months)
Saving with no interest$1,458 / mo
Saving in a 4 percent high yield account$1,347 / mo
Interest does the rest≈ $5,300

Parking the goal in a 4 percent account instead of a checking account cuts the required monthly contribution and adds thousands to the pile over four years.

Where to keep down payment savings

A down payment you will use within a few years should not be in the stock market, where a bad year could shrink it right when you need it. Keep it somewhere safe and liquid: a high yield savings account, a money market account, or short term certificates of deposit timed to your purchase. The goal is capital you can count on, not maximum growth.

Frequently asked questions

Can I buy a house with less than 20 percent down?

Yes. Many conventional loans allow 3 to 5 percent down and FHA loans allow 3.5 percent. You will pay mortgage insurance until you reach 20 percent equity, and your monthly payment will be higher, but the upfront cash needed is far lower.

Are closing costs part of the down payment?

No, they are separate and due at the same time. Closing costs typically run 2 to 5 percent of the loan and cover lender fees, title, appraisal, and prepaid taxes and insurance. Budget for both.

Should I raid my retirement account for a down payment?

Usually not. Early withdrawals can trigger taxes and penalties and cost you decades of compounding. Some plans allow loans or first time buyer provisions, but weigh the long term cost carefully before touching retirement money.

Is a bigger down payment always better?

Not always. Putting every dollar into the down payment can leave you with no emergency fund and no cash for moving or repairs. Many buyers stop at the point that removes PMI and keep the rest as reserves.