How Much To Save For A House?

Buying a house is one of life’s biggest milestones — but it also comes with one of the biggest price tags. The journey to homeownership often starts with a simple but important question: How much should I save before I buy a home?

Even if you take out a mortgage, there are several upfront costs you’ll need to cover. From down payments and closing costs to hidden expenses, it’s best to have clear savings goals. Planning ahead makes the process less stressful and more achievable.

Most financial experts recommend saving at least 25% to 35% of the purchase price of the house. This usually covers your down payment, closing costs, and other expenses. Down payments are often about 20% of the home’s price (though this varies depending on your mortgage), closing costs typically range between 3% and 5%, and additional expenses like insurance, taxes, and moving costs may add another 1% to 5%.

So, how can you estimate the amount you need? Let’s break it down.

Essential Costs to Consider

When budgeting for a home, remember that the mortgage itself is not an upfront cost, but you’ll be paying that monthly. Instead, focus on the expenses you need to cover before you get the keys. These generally fall into three categories:

• Down Payment
• Closing Costs
• Miscallaneous Expenses

1. Down Payment

The down payment is the lump sum amount you pay upfront when purchasing the home. It’s a cash deposit that reduces your loan amount.

As a rule of thumb, the down payment is often 20% of the purchase price. For example, if a home costs $300,000, the down payment would be about $60,000.

So why the “magic number” of 20%?

• With a 20% down payment, your loan is smaller, which means lower monthly mortgage payments.

• In most cases, it also helps you avoid paying Private Mortgage Insurance (PMI). PMI protects the lender if you default, and is usually required until you’ve built 20% equity in your home.

• A larger down payment often improves your chances of loan approval and may secure you a better interest rate.

Of course, not everyone can manage 20%. Many lenders allow smaller down payments (as low as 3%–5%), specifically with government-backed loans. The trade-off is higher monthly payments and possible PMI charges.

2. Closing Costs

Besides your down payment, you’ll also need to cover closing costs. These are the fees and expenses tied to finalizing the home purchase, and they must be paid before you receive the keys.

Closing costs generally include:

• Homeowners insurance
• Title insurance
• Appraisal and inspection fees
• Loan origination and application fees
• Escrow fees
• Property taxes (prorated)
• Attorney fees (if applicable)

Your lender will provide an estimate of these costs during the mortgage application process. On average, they add up to 3%–5% of the purchase price.

For instance, if you buy a home for $350,000, you can expect closing costs somewhere between $10,500 and $17,500.

3. Other Expenses

Finally, don’t forget the one-time and ongoing expenses that come with moving into and maintaining your new home. These may include:

• Moving costs
• Initial utility setup or deposits
• Homeowners association (HOA) fees
• Immediate repairs or renovations
• Furniture and appliances
• Annual maintenance and repair costs

Experts suggest setting aside 1%–2% of your home’s purchase amount each year for ongoing maintenance. Additionally, plan for 1%–5% upfront for initial extras like moving, setup, or urgent fixes.

How Much to Save in Total?

Adding all of this together, most buyers should aim to save around 25%–30% of the home’s price before starting the purchase process.

For example, saving 25% would usually cover:

• 20% down payment
• 5% closing costs

But since you may also face relocation costs, taxes, insurance, or repairs, it’s safer to save closer to 30%.

For exact numbers, you can use Total Mortgage calculators to see how much to save for a house. 

Example Calculation

Let’s say the purchase price of a home is $300,000. Here’s what your upfront savings might look like:

In this example, you’d want at least $81,000 saved to cover upfront expenses.

Age-Wise Savings Example

The earlier you start saving, the more convenient it is to reach your homeownership goal.

Take the example of Jane Doe, who wants to buy her first home at different ages. Let’s assume the home price is $300,000, and she needs 27% saved ($81,000).

• By age 25: She would need to save about $1,687 per month for 4 years (around $20,250 per year).
• By age 30: She would need about $750 per month for 9 years (around $9,000 per year).
• By age 40: She would need about $356 per month for 19 years (around $4,264 per year).

This is just one scenario. Actual savings needs will depend on your target home price, location, income, and the type of mortgage you qualify for.

Other Factors That Influence Savings

Every buyer’s situation is unique. Your savings target can change depending on:

• Local real estate market – Home prices vary significantly by region.
• Type of mortgage – Conventional vs. government-backed loans have different down payment requirements.
• Interest rates – Affect your long-term monthly payments and affordability.
• Lifestyle and family needs – Bigger homes or prime neighborhoods are equal to higher upfront costs.

That’s why it’s smart to start with a budget and then work backward to a savings goal.

Final Thoughts

Buying a home is a huge financial step, but with the right planning, it doesn’t have to be overwhelming. Aim to save at least 25%–30% of your home’s purchase price for down payments, closing costs, and other essentials. If possible, save more to create a buffer for unexpected expenses.

With discipline and a smart savings strategy, you can achieve homeownership without putting unnecessary strain on your finances.

Looking for a mortgage plan that fits your budget and long-term goals? Connect with us at Total Mortgage to find the best option for your needs.