Tips and Advice

How to Save a Down Payment for a House

We provide expert advice on how to effortlessly save for a down payment. With our tips, Let us simplify the path to homeownership with our step-by-step guide.
Written by:
Holly Johnson
Edited by:
Kristin Marino verified

When real estate prices rise faster than wages, it can be difficult to save up the down payment for a house. Especially if you’re also paying rent for your current one. And then there are closing costs, which you may have to pay in cash, borrow, or ask the seller to cover.

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Accelerate your savings

If you purchase a median priced home in the US (about $265,000 as of this writing), and could save $300 a month, it would take 14 years to come up with 20% down.

Fortunately, there are mortgages that allow you to get in the door with as little as 3% down, or even zero if you qualify for VA or USDA home loans. And you may be able to save more with a few budgetary tweaks.

As you work on getting your finances in shape to buy your first home, consider these important tips.

Pay off high interest debt first

While saving a down payment for a house may be your priority, paying off high interest debt could help you reach your goal faster. Debt consolidation loans may help you erase that debt faster and at a lower interest rate. (As of this writing, average personal loan interest rates run about % lower than average credit card rates.)

Related: Why Should You Consolidate Debt?

Set up a targeted savings account

Saving for any goal is immensely easier when you take the time to set up a targeted savings account. You’re less likely to accidentally spend money when you separate your savings from your checking.

When searching for a new account to open, keep in mind that many online banks offer high yield savings accounts with no fees. When you keep your savings separate and put it in an interest-bearing account, it’s easier to watch it grow over time.

Also consider making your savings automatic — as in, set up automatic bank transfers on payday or on a specific day of the month. Making your savings automatic will ensure you don’t get so bogged down by other responsibilities that you forget to save each month.

Related: Personal Loan Interest Rates (And How to Pay Less)

Lower your expenses

Also try to lower your monthly expenses if you can. Doing so will free up extra money you can use to buy your first home.

We recommend tracking your spending from prior months so you can see where your money is going — and which areas you may be spending the most in. Look for low-hanging fruit or overspending that may be the easiest to cut. You may be spending more than you realize on dining out or groceries, for example. Or maybe you’re spending more than you dreamed on movies and entertainment, online shopping, or purchases made for convenience.

Whatever spending categories are plaguing your budget the most, look for ways to cut your spending so you can save more money each month.

Related: 13 Money Saving Tips

Pick up a side hustle

Also consider finding a way to earn more money, then taking those extra funds and designating them for a down payment for a house. You may be able to pick up overtime or more hours at work, for example.

When budgeting for your down payment, set a time limit so your extra work has a purpose, and so that you can remind yourself after a tough day that it’s only temporary.

If not, consider working part-time during evenings or weekends, or picking up a side hustle you can do during your free time. Many people choose to driver for Uber or Lyft, tutor children online, or complete tasks through a platform like in order to earn more money, and you can be one of them.

Ask for a gift

You may be able to use “gifted” money toward a down payment for a house with a conventional mortgage, a VA loan, or an FHA home loan. However, there are some rules and restrictions that govern how much gifted money you can use as a down payment, and under what terms. For example, you can typically use gifted funds for a down payment with a VA loan or FHA loan provided you have a credit score of 620 or higher.

If family members want to help you buy your first home, gifting down payment funds is a great way to do it. However, you may never know who is willing to contribute unless you ask.

Be a better borrower

Another important step you can take as you save the down payment for a home is working hard to improve your credit score. If you’re able to move the needle and get your credit score in the “very good” range or better (typically any FICO score of 740 or higher), it’s possible you’ll qualify for a home loan with the lowest interest rate and best terms available.

No matter what you do, don’t sit back and hope that a down payment arrives on your doorstep — or that the money will somehow save itself. If you want to buy your first home and save up the down payment for a house, you have some work to do. The sooner you get started, the better off you’ll be.