How do I save for a house?

Saving for a house is usually a mix of budgeting, setting a target, and preparing your finances for a mortgage.

1. Figure out your total target

Don’t just save for the down payment—also plan for:

• Down payment: Many conventional loans can go as low as 3%–5% down, and FHA loans are often 3.5% down for qualifying buyers. A 20% down payment can help you avoid PMI.
• Closing costs: Often about 2%–5% of the loan amount.
• Moving and immediate setup costs: Budget extra for movers, repairs, and basic furniture.
• Emergency cushion: It’s smart to keep some cash left after closing for surprises.

2. Build a savings system

• Track spending so you can find extra money to save.
• Set up automatic transfers into a separate house fund.
• Put tax refunds, bonuses, and gifts toward the goal when possible.

3. Keep the money in the right place

• If you’re buying soon: use a high-yield savings account or short-term CDs.
• If you’re buying farther out: you may consider more growth-oriented options, but only if you can tolerate market risk.

4. Strengthen your mortgage profile

• Pay down high-interest debt.
• Keep your credit utilization low.
• Avoid opening new credit lines or taking on big new debts right before applying.
• Lenders look at your debt-to-income ratio, and lower is usually better.

5. Get clear on loan options

Some buyers qualify for 0% down loans, such as VA loans for eligible military members or USDA loans for eligible rural properties.