How Much to Save for a Down Payment (And How Long It Takes)
Saving a 20% down payment on a $400k home is $80,000. That's daunting until you do the math at 4-5% APY in a high-yield savings account. This guide turns "I should save more" into a specific timeline.
Use the calculator
Savings Calculator
Step-by-step
- 1
Decide your target home price
Use the affordability rules first. If you can afford a $400k home, your 20% target is $80k (or $14k for 3.5% FHA, or $40k for 10%).
- 2
Choose your down payment percentage
20% avoids PMI but takes longer. 10% with PMI gets you in faster — extra ~$200/mo carrying cost is often less than waiting through rising prices.
- 3
Open the Savings Calculator
Set your goal, current savings, monthly deposit, and APY (use 4.5% for HYSA in 2026). The result tells you the exact months/years to your goal.
- 4
Adjust monthly deposit to hit target date
Want it in 3 years instead of 5? The calculator shows what monthly deposit gets you there.
- 5
Park savings in a HYSA, not a checking account
High-yield savings accounts (Marcus, Ally, SoFi) pay 4-5% in 2026. A traditional bank pays 0.01%. On a $80k goal, that delta is $3,000+/yr in free interest.
💡 Tips
- Don't invest down-payment savings in stocks if you need it within 3 years — too much risk of being underwater when you need it.
- First-time buyer programs (FHA, USDA, VA) accept 0-3.5% down. Useful if waiting longer means missing the market.
- Closing costs are separate. Add 2-5% of home price to your savings target.
FAQ
Is 20% down still expected?
Not legally required, but it avoids PMI and often lower rates. Median first-time buyer puts down 8% in 2026.
Should I borrow from my 401(k)?
Generally no. You lose growth on borrowed funds and owe it back if you change jobs. Penalty + tax on early withdrawal makes the math worse.
What if rates drop while I'm saving?
You can refinance after closing if rates drop materially. Typical break-even is 1.5-2% lower.