Build the full cash target
For a $400,000 home, 5%, 10%, and 20% down payments are $20,000, $40,000, and $80,000. CFPB notes that closing costs often range from 2% to 5% of purchase price, so the down payment alone is not the total cash needed.
- Down payment options based on target price
- Estimated closing costs and prepaid items
- Moving, utility setup, and immediate repairs
- Emergency money that remains after closing
Keep affordability connected to the goal
A larger down payment can reduce the loan, but the purchase still needs to fit income, debts, taxes, insurance, maintenance, and other goals. Recheck the home-price range before spending years saving toward a number that would still create an unaffordable monthly payment.
Match the account to the purchase window
A fixed purchase date needs accessible funds and limited downside risk. If the date is flexible and far away, a different mix may be reasonable, but test a lower-return case and reduce risk as closing approaches.
Example: a $60,000 cash-to-close goal
Suppose the total target is $60,000 and $10,000 is already assigned to the house fund. With five years left, the no-growth contribution is about $833.33 per month; at a steady modeled 3% return it is about $748.43. Emergency savings should remain outside both figures.
What to check before you decide
- Actual loan eligibility, cash-to-close, assistance programs, and costs depend on location, lender, property, and borrower.
- A higher investment-return assumption should not substitute for a realistic home price and deadline.
Sources behind this guide
These official and primary sources let you verify rules, definitions, and terms that may change.
CFPB — Determine your down payment↗CFPB — Decide how much to spend on a home↗Investor.gov — Savings Goal Calculator↗