Saving for a house down payment

A house down payment is the most common big financial goal, and also the one people most often misjudge. The right number depends on the price of the house, the loan type, and the closing costs — not on a generic '20% rule.'

The real number

• 20% down is the classic target and avoids Private Mortgage Insurance (PMI).
• FHA loans allow as little as 3.5% down for first-time buyers with good credit.
• Conventional loans allow 3–5% down for first-time buyers.
• VA loans (military) and USDA loans (rural) can allow 0% down.
• Closing costs are another 2–5% of the home price and often get forgotten.

Where to park the money

If you're buying in less than 3 years, this money belongs in cash (HYSA, money market, or short-term Treasuries). Not in stocks. Not in crypto. Not in a 'balanced' portfolio. A 25% drawdown six months before closing has ended many home purchases. Boring beats clever when the timeline is short.

When to rethink the whole plan

If you're saving for more than 5 years and home prices in your area are rising faster than you can save, the math starts working against you. That doesn't automatically mean 'keep renting forever' — but it does mean the honest conversation is whether you're saving for the right city, the right house, or the right timeline.