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How Much Should You Save When Purchasing a Home?

by Tiffany Vessels

Buying a home is an exciting journey, but before you start scrolling through listings or visiting open houses, it’s smart to know how much you should have saved up. The answer isn’t one-size-fits-all, but here’s a friendly breakdown to help you plan for a smooth homebuying experience.

1. The Down Payment: The Big Ticket Item 💵

Traditionally, a 20% down payment is recommended, but many buyers put down less—sometimes as little as 3-5% with certain loan programs. For example, on a $400,000 home, 20% would be $80,000, while 5% would be $20,000. Keep in mind, if you put down less than 20%, you may need to pay mortgage insurance, which adds to your monthly costs.

2. Closing Costs: The Sneaky Extras 📝

Closing costs typically range from 2% to 5% of the home’s purchase price. These cover things like lender fees, title insurance, and taxes. On that same $400,000 home, closing costs could run $8,000 to $20,000. Some buyers negotiate for the seller to cover part of these costs, but it’s wise to be prepared just in case.

3. Moving and Immediate Expenses 🚚

Don’t forget about moving trucks, utility deposits, and any immediate repairs or furniture you’ll need when you move in. Setting aside $2,000–$5,000 for these expenses can help you avoid surprises.

4. Emergency Fund: Your Safety Net 🛟

It’s a good idea to have three to six months’ worth of living expenses saved up—even after you’ve paid your down payment and closing costs. This gives you peace of mind for those unexpected bumps in the road, like a leaky roof or a job change.

Putting It All Together

Here’s a quick example for a $400,000 home:

Down payment (5%): $20,000
Closing costs (3%): $12,000
Moving & setup: $3,000
Emergency fund: (varies, but aim for a cushion)

Total recommended savings: $35,000+ (not including your emergency fund)