How to Save for a House Down Payment (Even on a Tight Budget)

The median down payment for first-time homebuyers is 8% — on a $350,000 home, that's $28,000. Saving that amount while paying rent feels daunting. But with a clear plan and the right accounts, it's achievable in 2–4 years for most people.

How Much Down Payment Do You Actually Need?

• 3% — Conventional loan (first-time buyers, Fannie/Freddie programs)
• 3.5% — FHA loan (lower credit score OK)
• 5–10% — Conventional, avoid some PMI scenarios
• 20% — Avoid PMI entirely, best mortgage rates
• 0% — VA loans (veterans) and USDA loans (rural areas)

Where to Keep Your Down Payment Savings

Down payment savings should not be in the stock market — you need the money in 2–5 years and can't risk a market crash right before you buy. Use high-yield savings accounts (4–5% APY) or short-term CDs. Keep it separate from your emergency fund.

How to Accelerate Your Down Payment Savings

1. 1Automate a monthly transfer to a dedicated HYSA the day you get paid
2. 2Cut one major expense (eating out, subscriptions, car upgrade)
3. 3Apply every windfall (tax refund, bonus, gifts) to the fund
4. 4Consider a side income specifically for this goal
5. 5Look into down payment assistance programs in your state

First-Time Homebuyer Programs

Many states offer down payment assistance grants or low-interest loans for first-time buyers. HUD-approved counseling agencies can help you find local programs. Some employers also offer homebuyer assistance as a benefit — worth asking HR.