Post date: May 3, 2021 11:30 AM

How to Save Up for Your First Down-Payment on a House

When buying a house, offering a big down payment can save you a lot of money in the long run. Here's how to save for a down payment the smart way.

Saving for a down-payment is a lot different from saving for retirement, vacation, or another large purchase.

So let's get into the steps you need to take to save for a house!

  1. Figure out how much you’ll need to save

You don't need to know the exact number down to the penny, but it is very wise to get a pretty accurate idea of how much money you are going to need to make a down payment. Sitting down with an experienced Mortgage officer will help you understand how much of a mortgage you qualify for and how much you need for a down payment.

Part of figuring out how much you need to save for a down-payment is determining when you'd like to buy a home. So figure out realistically when you'd like to purchase a home and determine what it will cost and how much you need to start saving every year or month in order to have enough money for a down-payment. Without a realistic time frame and budget in mind, it will be very difficult to save enough for a down-payment on a house.

  1. Save in a Smart Place

As a rule, since the money that you are saving for the down payment on a house has a definite purpose, and needs to be reached within a specific timeframe, you should not save money in risk-type investment vehicles (stocks, real estate investment trusts, est.) Instead, you should save your money in super-safe vehicles like a boring old savings account or a certificate of deposit.

Sure, you may be able to earn more money by investing your down payment account in higher-risk vehicles, but there is also the very real risk that you will lose money in the process.

Remember, if you’re saving for a house, the worst-case scenario would not be missing out on returns, it would be losing some of the money you needed to buy your home.

  1. Set-Up an Automated Savings Plan

To prepare yourself for the saving mindset, and to stay on track, set up a direct way to send a percentage of your earnings every week or month into a savings account, specifically for your future down-payment. You will find yourself saving more money and reaching your financial goals. Removing the temptation and ability to spend a portion of your check will make it easier to save it, and before you know it you will have reached your goal for a down-payment.

  1. Bank those windfalls

You can make the process of saving money for a down payment on a house easier—or even shorten the process—by banking periodic windfalls. These can include income-tax refunds, gifts received, bonuses or large commission checks, or even the sale of personal assets.

By depositing these funds into your down payment savings account, you fast-forward the process of saving money to buy your future home. Regularly depositing a few thousand dollars per year in windfalls can chop a couple of years off of your savings timeframe.

  1. Build flexibility into your savings plan

Whatever the size of your down payment, it is important to build flexibility into your savings plan.

While you’re saving up money, there’ll be other demands on your finances. These can include major car repairs, replacement of a car, uncovered medical expenses, or even the temporary loss of a job. None of these will magically stop just because you have a goal of saving money for a down payment on a house. You’ll have to be ready when they happen.

Make sure that you have an emergency fund—before you even start saving for your down payment—and keep it well-stocked. And if you have predictable expenses, such as replacing your car, you’ll need to simultaneously prepare for that expense as well.


Buying a home can be a long process that requires a good chunk of your savings, but think of it all as preparation for homeownership. You’ll have all of those expenses after you buy your home too, but you’ll also have large expenses related to the home itself. So think of this as a dry run to prepare both your finances and your psyche for the extra expenses that homeownership brings.

Jeff Wagner Mortgage Locator CA is a Ventura County licensed mortgage loan originator based in Oxnard, California. Call or text Jeff 805-874-2829. NMLS ID 2054210