A first-time buyer recently asked me how much he needs to save to buy a house. That can range from virtually nothing, if you are a VA buyer, to as much as you want to put down but the national average (per an April Redfin study) has been about 15 percent for the past 4 years. Prior to the pandemic that number was 10 percent. Traditionally in higher cost areas buyers tend to put more down in order to lower their monthly payment.
In addition to the downpayment you will also need funds to cover closing costs which can be anywhere between 2% and 5% of the purchase price. There are loans out there which require as little as $0 down (VA loans) to 3.5% or 5% for FHA and some conventional loans. Keep in mind the less you put down, the more you are financing and the higher your monthly payment will be.
If you are buying an entry-level home for $500,000 and want to put down the average - 15 percent - that is $75,000. Closing costs, at an additional 3% are $15,000 which means you need at to save $90,000 in this scenario. Again you can buy a house with less than 15 percent down but I am illustrating the average. The loan package you get will be determined by the percent you put down, your credit score, your income, your debt-to-income ratio and if you qualify for any special programs (first-time buyer, first responder, buying in an area that qualifies for assistance, etc.)
The bottom of my website home page has a mortgage calculator if you want to run scenarios to see what your estimated payment would be with different downpayment amounts. It is really important to talk directly to a lender to have them run actual numbers based on current interest rates. This should be your first step before you go shopping for a house. That will help you better understand how much you need to put down and what you are comfortable paying on a monthly basis. Reach out if you need a lender referral and start saving! No one ever said, "I saved more than I needed for my downpayment and closing costs."







