How to Save for a House

Saving for a house is the biggest financial project most people undertake. The math is daunting — median home prices in major US metros need $60-120k down for a 10-20% down payment. But a focused savings plan makes it doable in 3-7 years.

This guide is the concrete steps to actually get there.

1. Pick the target first

What home, what neighborhood, what price? Without a target, “saving for a house” is vague. Browse Zillow. Walk the neighborhoods. Pin down a specific $X target. The savings math only works if you know the number.

2. How much down payment

Conventional: 20% down avoids PMI. FHA: 3.5% down, higher monthly cost (mortgage insurance). First-time buyer programs sometimes reach 0-5% down. Decide which route fits, then target that number.

3. Don’t forget closing costs

Another 2-5% of purchase price. Plus a reserve of 3-6 months of housing expenses. Your real target is roughly 25-30% of home price saved, not just the sticker down payment.

4. Open a separate high-yield savings

Named “House Fund.” Separate from emergency fund. At 4-5% APY, your money works for you while you save. Mixing funds makes it too easy to spend.

5. Automate aggressively

Direct deposit 20-30% of each paycheck straight into the House Fund. Treat it like rent — non-negotiable. Willpower-based saving fails over years.

6. Cut the top 3 biggest categories

Housing (downsize, get a roommate), food (cook more), transportation (keep an old car). Small cuts don’t move the needle for a $100k goal. Big cuts do. See savings guide.

7. Windfalls go 100% to the House Fund

Tax refunds, bonuses, gifts, side hustle income. No lifestyle inflation. Every windfall is a month off the timeline. This alone can cut your save-time by 1-2 years.

8. Don’t invest short-term savings

If you’ll buy within 3-5 years, stocks are too risky. A 20% drawdown the year you plan to buy is devastating. High-yield savings or short-term treasuries (T-bills) are the right place.

9. Increase income, not just cut spending

You can only cut expenses so far. Raises, job changes, side hustles, overtime. Income growth compounds with savings rate. See our income guide and salary negotiation guide.

10. Watch for buyer’s remorse signals

You’re not obligated to buy when you hit your number. If rates spike, the market crashes, or your life plans change (new job, new city, new relationship), sometimes the right move is to wait. A house is a huge decision — don’t let sunk-cost momentum force a bad one.