How to Set a Down Payment Savings Goal: A Step-by-Step Guide

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How much should you save for a down payment?

Save at least your loan program's minimum down payment, plus closing costs, and then decide how much more is worth saving based on your market and your timeline. Program minimums start at 3% for several conventional programs and 3.5% for FHA, and VA and USDA loans can require no down payment for buyers who qualify.

Here are the figures this guide uses, with the publisher and date for each. Programs and prices change, so check each page for current terms before you plan around a number.

Sources: NAR September 2026 existing-home sales, HUD FHA loans, Fannie Mae HomeReady, Freddie Mac Home Possible, Freddie Mac HomeOne, VA purchase loans, USDA guaranteed loan program, NAR 2025 Profile highlights, NAR 2024 Profile highlights, Freddie Mac on closing costs, CFPB on canceling PMI, Fannie Mae gift rules.

What does each down payment level mean?

• 3% to 3.5%: The common minimums for conventional (3%) and FHA (3.5%) loans. You borrow more, and you generally pay for mortgage insurance.
• 10%: The median down payment among first-time buyers in NAR's 2025 survey. It is a benchmark, not a requirement.
• 20%: The point that comes up most often because of PMI on conventional loans. The CFPB says you can ask your servicer to cancel PMI when your balance is scheduled to reach 80 percent of your home's original value, and your servicer must automatically terminate it at 78 percent if you are current on payments.

How do you calculate your dollar target?

Your dollar target is the down payment plus closing costs, plus any reserves your lender requires. Work through it in four steps:

1. Pick a target price. Use the median price in the neighborhoods you want, from your local listings. This guide uses NAR's national median of $417,500 as a stand-in.
2. Multiply by your down payment percentage. At 3.5% down, $417,500 requires about $14,613. At 3% it is $12,525, and at 10% it is $41,750.
3. Add closing costs. Freddie Mac says to be prepared to pay between 2% and 5% of the purchase price in closing fees. On $417,500, that is $8,350 to $20,875. The CFPB defines closing costs as the upfront costs of your loan and the real estate transaction, excluding your down payment, so they are in addition to it.
4. Ask your lender about reserves. Reserve requirements depend on the loan program and lender, and some buyers also keep an emergency fund after closing. Add whatever your lender tells you to the total.

For the example, a 3.5% down payment of about $14,613 plus closing costs of $8,350 to $20,875 comes to about $22,963 to $35,488, before reserves and before any assistance. Your lender's Loan Estimate shows your actual Estimated Cash to Close, which the CFPB describes as the estimated amount of money you will have to bring to closing.

For a closer look at what goes into closing costs, read closing costs explained for first-time buyers, and see the cash to close guide. To see how the two pieces differ, read down payment vs. closing costs.

How long will it take to save?

Divide your dollar target by your monthly savings. Using the example above:

• At $600 a month, $22,963 takes about 38 months and $35,488 takes about 59 months.
• At $1,000 a month, the same targets take about 23 months and about 35 months.

This is plain arithmetic with no interest earned. Your own numbers will differ, and the gap between a low and a high closing cost estimate matters as much as your savings rate. If the timeline feels too long, the next sections cover the levers that shorten it.

Can family and friends shorten the timeline?

They can, if they choose to help and your lender accepts the documentation. In NAR's 2025 Profile of Home Buyers and Sellers, 22% of first-time buyers received a gift or loan from family or friends toward their down payment.

As a simple illustration, if ten people each gave $200, that is $2,000 toward your target. Fannie Mae's Selling Guide says gift funds may fund all or part of the down payment, closing costs or reserves, and requires a gift letter signed by the donor stating the amount and that no repayment is expected. Lenders also verify the donor's funds or the transfer, so ask your lender how it wants gifts documented before any money moves.

Dreamfund is building a way for family and friends to give toward a buyer's goal. Each gift is recorded with who gave it, their relationship to the buyer, and a signed no-repayment attestation. The buyer's lender decides what gift documentation it accepts.

For more on this, see how down payment sources can be combined.

Where should you keep your down payment savings?

For money you plan to use within a few years, choose accounts that do not lose value when markets fall. A drop in a stock portfolio just before you make an offer can set your timeline back. Common options are:

• High-yield savings accounts: Liquid, and deposits at an FDIC-member bank are insured up to applicable limits. A common choice for down payment savers.
• Money market accounts: Similar in purpose, with rules that vary by institution. Check for limits on withdrawals and for minimum balances.
• Certificates of deposit (CDs): You lock in a term in exchange for a fixed rate. Choose a term that ends before you expect to buy, and check the early withdrawal penalty.

Rates change often, so compare current offers instead of relying on any figure you read here.

Does down payment assistance reduce your savings goal?

Yes, if you qualify, because confirmed assistance lowers the amount you must save yourself, dollar for dollar. Down payment assistance (DPA) comes from state and local housing agencies, nonprofits, lenders and some employers, as grants, forgivable loans or deferred-payment second mortgages. Each program sets its own income limits, locations and amounts, so check the current terms of any program before you subtract it from your target. Some employers offer housing assistance. Employer contributions are not currently supported on Dreamfund.

HUD says it has no direct grant programs to homebuyers for down payment or closing cost assistance. It provides grants to state and local governments, so start with your state housing finance agency and a participating lender. Read more in our guide to first-time homebuyer down payment assistance and on the down payment assistance hub.

What is a simple planning framework?

Use this order:

1. Pick your target home price range.
   Research actual listings in your target area. Use the median, not the aspirational top of the range.
2. Choose your down payment percentage.
   Ask a lender which programs you qualify for. Your credit profile affects your options, as explained in how your credit score affects your down payment.
3. Calculate your all-in target.
   Down payment, plus closing costs (Freddie Mac says 2% to 5% of the price), plus any reserves your lender requires.
4. Research assistance in your area.
   Check your state housing finance agency website and ask your employer whether it offers housing assistance. Subtract only assistance you have confirmed.
5. Decide whether family and friends may help.
   If they want to, ask your lender how gifts must be documented before any money moves.

If you are still early in the process, start with the first-time buyer guide and the first-time homebuyer hub. To reduce the total you need, read how to lower your cash to close. For the detailed look at the percentage question, see how much you need for a down payment in 2026.

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