How Much Should You Save Before Buying a House?

Learn What Costs You Could Face

 A man and a young boy move boxes into an empty home.

MoMo Productions / Getty Images

If you're planning to buy a home, knowing how much you need to save can be tricky. In some cases, you can buy a home with just a few thousand dollars and, in other cases, you might need much more. 

Learn more about how you can create a target amount for your home savings strategy. 

Key Takeaways

  • Aim to save 20% of the cost of the home for a down payment and 5% for closing costs. 
  • Smaller expenses when buying a home—like moving fees, new home furnishings, and a starter home maintenance fund—can add up.
  • You can estimate a budget for smaller costs and add that to what you expect to need for your down payment. 

Average Cost of Buying a Home

The cost to buy a home will be different for everyone because there are many factors that go into the total expense.

Here, we can explain some of the common costs of buying a home and their average expenses. You can use this information to create a custom estimate for yourself.

Down Payment

The biggest cost in the home buying process will likely be your down payment. Many buyers aim to save up at least 20% of the price of the home they want to buy. This is because you need to put down this much to avoid private mortgage insurance (PMI) with a conventional mortgage, the most common type of mortgage.

For example, the median sales price for a home in Q3 2021 was $404,700, meaning you'd need to aim to save $80,940 if you want to make a 20% down payment.

However, many government-sponsored mortgages require a much smaller down payment. FHA loans require as little as 3.5% down for first-time buyers, for example. VA loans can require no money down at all for those who qualify. 


On any loan, if possible, it's still ideal to aim for a 20% or more down payment to save on PMI and reduce how much you need to borrow.

Closing Costs

Closing costs are another significant expense to factor into the cost of buying a home. These prepaid expenses include fees for title insurance, home inspection, and appraisal, setting up an escrow account, property taxes and insurance, and mortgage origination.

Closing costs average about 2% to 5% of the purchase price of the home. So, for example, budgeting 5% for closing costs for the median-priced home of $404,700, would mean you’d need to save another $20,235. 

You may be able to roll some of these costs into your mortgage. But by paying them upfront, you won't need to borrow as much. Your lender should also give you a loan estimate notifying you of all of the closing costs, including which ones you can save money on by shopping around for. 

Moving Expenses

Whether you handle the move yourself or hire professional movers, you’ll likely need to budget some amount of money for the move. You can save money doing it yourself but you’ll need a vehicle, lots of spare boxes, and the time and strength to move your items.


How much your move will cost will vary depending on how much you want to purchase, and how far you're moving. Pods, one popular moving company, estimates that a full-service move (with transport and loading/unloading) from New York City to San Francisco costs an average of between $3,893 and $7,230.

Pre-Move-in Remodels and Repairs

You will likely want to do some work on your home before moving in, from installing a new lock on the door to repainting and installing new flooring.

You won’t know exactly what remodeling or repairs you’ll need to pay for until you choose a home. But you can include some funds for this work in your savings budget.

Decorating and New Furniture

Furnishing and decorating a home takes years of time and money. But you might want to do some decorating or buy new furniture right away. 

If your new home doesn’t have a full suite of appliances, you may need to purchase a refrigerator or washer and dryer, for example. 


Decorating and furniture costs will vary depending on your tastes and needs. This is another cost that you can draw from your down payment fund if you need, but remember that this will increase the amount you need to borrow. 

Move-Out Fees

If you're currently renting, you may face fees when you move out, such as lease breakage (early termination) fees or cleaning fees. If you're already a homeowner, there will be expenses involved in selling your home, like real estate commission.

Starter Home Repair Fund

Consider starting a separate home repair fund so that you can pay for unexpected repairs without derailing your budget or going into debt. The fund can pay for expenses like replacing a water heater or furnace or repairing a broken refrigerator.

Most experts advise saving around 1% of your home's value per year toward home maintenance. For a $404,700 house, that would be $4,047 per year or $337.25 per month.

How Much Do You Need To Save To Buy a Home?

Your down payment and closing costs will probably be your biggest expenses when buying a new home. Luckily, those two expenses are often easy to plan for because you can estimate the average expenses in advance. 

If you know what type of home you want to buy, where you want to live, and what type of mortgage you'll use, you can calculate a target amount to save. 

The other costs like moving expenses, home furnishings, and moving costs can be more difficult to quantify in advance. You may want to consider budgeting an estimated amount for these expenses.  

Frequently Asked Questions (FAQs)

How much do you need to buy a house?

At a minimum, you'll need enough money to cover a down payment and closing costs. A good credit score will make it easier to buy a house, but sometimes you can be approved with less-than-perfect credit. Different types of mortgages have different requirements for down payment amounts, closing costs, and credit scores. 

How much money do you get back in taxes when you buy a house?

Buying a house can have tax benefits. You can claim a deduction for the interest you pay on your mortgage (on up to $750,000 of debt) if you itemize your deductions. If you're a low-income homeowner, you may qualify for a Mortgage Tax Credit Certificate that gives you tax credit for your mortgage interest. 

What questions should you ask when buying a house?

Ask yourself whether the house fits in your budget. Consider both upfront costs like a down payment and ongoing costs like your mortgage payment, home repairs, and utilities. Other important questions to ask are whether the home is in a flood plain, what the condition of the home is, and whether it's a part of a homeowner's association (HOA).

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Consumer Financial Protection Bureau. “What Is Private Mortgage Insurance?

  2. Federal Reserve Bank of St.Louis. “Median Sales Price of Houses Sold in the United States.”

  3. U.S. Department of Veteran Affairs. “Purchase Loan.”

  4. U.S. Housing and Urban Development. “Loans.”

  5. Consumer Financial Protection Bureau. “Determine Your Down Payment.”

  6. National Association of Realtors. “Upfront Cost of Buying a Home.”

  7. PODS. “What Does It Cost to Move Cross-Country or Long Distance?

  8. Consumer Financial Protection Bureau. “Monthly Payment Worksheet.”

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