Building Your Home Down Payment
Saving for a home down payment is one of the most common financial goals. A dedicated savings plan with consistent monthly contributions and the power of compound interest can help you reach your target faster than you might expect. This calculator tracks your progress and projects when you'll hit your goal.
How Down Payment Size Affects Your Mortgage
A 20% down payment eliminates private mortgage insurance (PMI), which typically costs 0.5–1.5% of the loan amount annually. On a $400,000 home, avoiding PMI saves $2,000–$6,000 per year. FHA loans allow as little as 3.5% down for buyers with credit scores above 580.
High-Yield Savings Strategies
Park your down payment savings in a high-yield savings account (HYSA) or money market account to earn 4–5% APY. Some states offer First-Time Homebuyer Savings Accounts with state income tax deductions on contributions. IRA funds can be withdrawn penalty-free (up to $10,000 lifetime) for a first-time home purchase.
Frequently Asked Questions
Aim for 20% to avoid PMI, but 3–10% is common for first-time buyers using conventional or FHA loans. The right amount depends on your local market and loan type.
Only if your timeline is 5+ years. For shorter periods, keep savings in FDIC-insured accounts to avoid market risk right before you need the funds.
Yes. Many states offer down payment assistance programs, grants, or low-interest loans for first-time buyers. Check your state housing finance agency for local programs.