How Much Should You Save for a Down Payment? A First-Time Homebuyer’s Guide

By Allen Deaver | Asset Realty – Serving Central Texas Real Estate with Integrity

Are you thinking about buying your first home but unsure how much you need to save for a down payment? You're not alone! One of the most common questions I get from first-time homebuyers is, “How much should I save before I can buy a home?” Let’s break it down so you can confidently start planning your path to homeownership.

What Is a Down Payment?

A down payment is the upfront cash you pay when purchasing a home. It’s typically expressed as a percentage of the home’s total purchase price. The more you can put down, the less you’ll need to borrow—and the better your chances are of getting favorable mortgage terms.

How Much Should First-Time Homebuyers Save?

There’s no one-size-fits-all answer, but here’s a general breakdown:

🏠 Traditional 20% Down Payment

Pros: Lower monthly payments, avoid Private Mortgage Insurance (PMI)
Cons: Can take longer to save, which may delay buying your first home
Example: For a $300,000 home, 20% is $60,000
💡 The 3%–5% Option for First-Time Buyers
Many lenders offer low down payment programs:

Conventional Loans:

As little as 3% down

FHA Loans: Require 3.5% down

These are designed to help first-time buyers get into homes faster
Example: For a $300,000 home, 3% is just $9,000
🎖️ 0% Down Payment Options

VA Loans (for veterans, active military)

USDA Loans (for eligible rural areas)
Great options if you qualify—zero down, no PMI in many cases

What Other Costs Should You Plan For?

In addition to the down payment, don’t forget:

Closing costs: 2%–5% of the purchase price

Home inspection and appraisal fees
Moving expenses
Emergency savings (for home repairs or maintenance)
A smart starting point is to aim for at least 5%–10% of the home price saved, which gives you a strong foundation for your down payment and closing costs.

Tips to Help You Save Money Faster

Set a monthly savings goal and treat it like a bill
Open a dedicated savings account for your down payment
Look for down payment assistance programs (ask your lender or local agent)
Cut back on non-essential spending
Use your tax return or work bonuses to boost your savings

Ready to Take the First Step?

If you’re a first-time homebuyer in Central Texas, let’s talk about your options. I’ve helped hundreds of new buyers create a smart game plan, even with a small down payment. Whether you're ready to buy in the next few months or just starting to explore, I’m here to guide you every step of the way.

How Much Money Should I Save for a Down Payment?