How Much Should I Save to Buy My First Home?
Last reviewed: July 2026
Most first-time buyers should plan to save somewhere between 6% and 14% of a home's purchase price before they get the keys. That covers a down payment plus closing costs, which typically run 2% to 5% of the loan amount. On a $350,000 home, that's roughly $21,000 to $49,000 in cash, depending on your loan type. Good first time home buyer financial planning means knowing that number early, then building the savings to hit it without draining every dollar you own.
Key Takeaways
- First-time buyers usually need 6% to 14% of the purchase price in cash for the down payment and closing costs combined.
- FHA loans allow a down payment as low as 3.5% for qualified buyers, and some conventional loans go to 3%.
- Closing costs run 2% to 5% of the loan amount, a number many buyers forget to budget for.
- Keep your emergency fund intact after closing; a home creates new costs, not fewer.
About the Author: Jeff Judge, CFP®, AEP®, ChFC®, CLU® is Managing Partner of Chesapeake Financial Planners in Forest Hill, Maryland. He has been helping families and business owners in Harford County and the Baltimore metro area navigate big money decisions like first home purchases since earning his CFP® certification in 2013, by using Chesapeake Financial Planners’ signature process, the R.U.D.D.E.R. method™. Jeff often reminds first-time buyers that the down payment is only half the story; the cash you keep after closing matters just as much.
How Much Down Payment Do First-Time Buyers Actually Need?
The 20% down payment is a myth that scares people off for no reason. You do not need it. According to the U.S. Department of Housing and Urban Development, FHA loans let qualified first-time buyers put down as little as 3.5%. Many conventional loan programs accept 3% down for first-timers who meet income and credit requirements.
Here's the tradeoff. A smaller down payment means a larger loan, a higher monthly payment, and usually mortgage insurance until you build enough equity. On a conventional loan, private mortgage insurance typically gets added when you put down less than 20%, and it can run between 0.5% and 1.5% of the loan annually.
So the question isn't "what's the minimum?" It's "what down payment gives me a monthly payment I can live with?" Jeff Judge tells first-time buyers to run the monthly number first, then work backward to the down payment that makes it comfortable. A house you can technically afford and a house you can comfortably afford are two different things.
What Are the Hidden Costs Beyond the Down Payment?
The down payment gets all the attention, and that's exactly where people get caught off guard. Closing costs are the second big number, and they're real money. The Consumer Financial Protection Bureau notes that closing costs generally run 2% to 5% of the loan amount. On a $300,000 loan, that's $6,000 to $15,000 due at the closing table.
Closing costs include the loan origination fee, appraisal, title insurance, recording fees, and prepaid items like property taxes and homeowners insurance. Then come the costs nobody warns you about: moving expenses, immediate repairs, a new water heater that picks the worst week to fail, and furniture for rooms you didn't have before.
This is the part of first time home buyer financial planning most people skip. They scrape together the down payment, empty their savings to do it, and walk into homeownership with no cushion. That's the mistake Jeff sees most often. A home generates expenses; it does not reduce them.
How Long Should It Take to Save for a First Home?
That depends on your target number and how much you can set aside each month, but a realistic timeline for most first-time buyers is two to four years. Speed comes down to three levers you can actually pull: how much you earn, how much you spend, and where you park the savings while you wait.
Keep your down payment money out of the stock market. A home purchase you plan to make within a few years is a short-term goal, and short-term goals don't belong in volatile assets. Jeff Judge notes: "I tell first-time buyers to think of their down payment fund the way they think of a bill that comes due on a specific date — you would not put your rent money in the stock market, and the logic is identical when the bill is a closing table instead of a landlord." A high-yield savings account or a short-term certificate of deposit keeps the cash safe and FDIC-insured up to $250,000 per depositor, per bank. The return won't be exciting, but you'll have every dollar when you need it.
Automating the savings is what makes the timeline work. Set up a transfer the day after each paycheck lands so the money moves before you can spend it. Buyers who automate hit their goal far more reliably than buyers who save whatever is left over, because for most people, nothing is left over.
Should I Keep My Emergency Fund When Buying a Home?
Yes, and protecting it is one of the most important moves you can make. Your down payment savings and your emergency fund are two separate buckets that should never get combined. If you drain your emergency fund to close on a house, the first unexpected expense after move-in goes straight onto a credit card.
A solid emergency fund covers three to six months of essential expenses. After buying a home, those essential expenses go up, so your target emergency fund should go up too. This is why building both at once takes discipline, and why the timeline often stretches longer than buyers expect. For a deeper walk-through, our guide on How Much Should I Have in My Emergency Fund? breaks down how to size yours.
If high-interest debt is competing for the same dollars, deal with that first. Paying 22% on a credit card while saving in a 4% account is a losing trade. Our overview of the What is the best way to pay off debt quickly? explains how to sequence those priorities so you're not working against yourself.
Frequently Asked Questions
How much money do I need to buy my first home?
Most first-time buyers need 6% to 14% of the purchase price in cash, which covers the down payment plus closing costs. On a $350,000 home, that's roughly $21,000 to $49,000. The exact figure depends on your loan type, your down payment percentage, and the closing costs in your area.
Can I buy a home with no down payment?
A handful of programs allow zero down. VA loans require no down payment for eligible veterans and service members, and USDA loans offer zero down in qualifying rural areas. For most buyers without those qualifications, the practical minimum runs from 3% to 3.5% of the purchase price.
What credit score do I need to buy a first home?
FHA loans generally accept credit scores as low as 580 for the 3.5% down payment option. Conventional loans usually want a score of 620 or higher, and stronger scores earn lower interest rates. Improving your score before you apply can save thousands over the life of the loan.
Is it better to save a bigger down payment or buy sooner?
It depends on your situation. A bigger down payment lowers your monthly payment and can eliminate mortgage insurance, but waiting means more time exposed to rising home prices and rents. The right answer balances your monthly budget comfort against how long you can realistically keep saving.
Where should I keep my down payment savings?
Keep down payment money in a safe, liquid account like a high-yield savings account or a short-term CD, not in the stock market. Because you plan to use the money within a few years, you cannot afford a market drop right before you buy. FDIC insurance protects these accounts up to $250,000.
What's Your Number?
Buying a first home is one of the biggest financial decisions you'll make, and the cash you need is bigger than the down payment alone. Get a clear picture of your savings target and a plan to reach it without wrecking your safety net.
Disclosures
The information provided is for educational purposes only and should not be construed as investment advice. Investment strategies should be tailored to individual circumstances, risk tolerance, and goals. Past performance doesn't guarantee future results. Consult with qualified financial professionals regarding your specific situation.
Advisors associated with Chesapeake Financial Planners may be either (1) LPL Financial Registered Representatives offering securities through LPL Financial, Member FINRA and SIPC, and investment advisor representatives offering investment advice through Great Valley Advisor Group; or (2) solely investment advisor representatives offering investment advice through Great Valley Advisor Group and not affiliated with LPL Financial. Great Valley Advisor Group, and Chesapeake Financial Planners are separate entities from LPL Financial.
