How Much Do You Need Saved to Buy a House?
Last updated: October 2026 · Editorial standards
Most first-time buyers focus on the down payment — and then get surprised by how much more they need. The total cash required to close on a home typically runs 5–8% of the purchase price for a low-down-payment loan, and 22–27% for a conventional 20% down purchase. Here’s the complete picture.
The Four Buckets of Cash You Need
1. Down payment — the portion of the purchase price you pay upfront 2. Closing costs — fees to originate and close the loan, plus title and government fees 3. Cash reserves — funds left in your account after closing (lender requirement) 4. Moving and setup costs — the practical costs of taking possession
Getting approved for a mortgage requires having enough for #1 and #2. Getting approved and being in solid financial shape requires all four.
Total Savings Required by Home Price and Loan Type
| Home Price | Loan Type | Down Payment | Closing Costs (est.) | Reserves (2 mo) | Total Needed |
|---|---|---|---|---|---|
| $300,000 | FHA (3.5%) | $10,500 | $7,500 | $3,600 | ~$21,600 |
| $300,000 | Conventional (5%) | $15,000 | $7,500 | $4,200 | ~$26,700 |
| $300,000 | Conventional (20%) | $60,000 | $7,500 | $7,200 | ~$74,700 |
| $400,000 | FHA (3.5%) | $14,000 | $9,500 | $4,800 | ~$28,300 |
| $400,000 | Conventional (5%) | $20,000 | $9,500 | $5,400 | ~$34,900 |
| $400,000 | Conventional (20%) | $80,000 | $9,500 | $9,600 | ~$99,100 |
| $500,000 | FHA (3.5%) | $17,500 | $11,500 | $6,000 | ~$35,000 |
| $500,000 | Conventional (5%) | $25,000 | $11,500 | $6,600 | ~$43,100 |
| $500,000 | Conventional (20%) | $100,000 | $11,500 | $12,000 | ~$123,500 |
Closing costs estimated at 2.5% of purchase price. Reserves based on ~2 months of estimated PITI. Actual figures vary.
Down Payment: What’s the Minimum?
The minimum down payment depends on your loan type:
- FHA: 3.5% (with 580+ credit score); 10% (500–579)
- VA: 0% (eligible veterans and service members)
- USDA: 0% (rural properties, income limits apply)
- HomeReady / Home Possible: 3%
- Conventional: 3–5% minimum; 20% to avoid PMI
FHA upfront MIP: FHA loans require an upfront MIP of 1.75% of the loan amount, which is typically financed into the loan — meaning you don’t pay it out of pocket at closing, but it adds to your loan balance.
Closing Costs: The Second-Largest Item
Closing costs typically run 2–4% of the loan amount, depending on your lender, location, and loan type. They include:
- Lender origination/underwriting fees
- Appraisal ($400–800)
- Title search and title insurance (lender’s + owner’s)
- Recording fees (county government)
- Transfer taxes (varies widely by state)
- Prepaid interest (days from closing to end of month)
- Homeowners insurance premium (first year, paid at closing)
- Initial escrow deposit (2–3 months of taxes and insurance)
Transfer taxes vary dramatically by location:
- No transfer tax: Texas, Wyoming, Montana, several others
- Low: California (0.11%), Florida (0.35%)
- High: New York City (1–1.425% buyer + 0.4–0.65% state), Pennsylvania (~1% each party)
If you’re buying in a high-tax state, budget toward the 4–5% range for closing costs.
Reserves: What Lenders Require (and Why)
After closing, most lenders want to see that you have funds remaining in your accounts — not just enough to close, but a cushion afterward. These are called “reserves.”
Reserve requirements vary by loan type:
- FHA: No minimum reserve requirement for 1–2 unit properties (though having some is wise)
- Conventional: 2 months of PITI for primary residence (more for high-cost loans and investment properties)
- Jumbo: 6–12+ months of reserves typically required
Reserves are measured in months of PITI (Principal, Interest, Taxes, Insurance) — your total estimated monthly housing cost.
Why this matters: Reserves demonstrate to the lender that you can continue paying the mortgage even if something goes wrong — a car repair, medical expense, or temporary income disruption. Buying a home with zero cash left over is financially risky regardless of what the lender requires.
Moving and Setup Costs: The Overlooked Category
First-time buyers often budget precisely for closing and then forget that moving into a home has its own costs:
- Moving expenses: $800–2,500 for local, $4,000–10,000+ for long-distance
- Immediate repairs or updates: Painting, replacing appliances, light fixtures
- Furniture: A home is larger than an apartment — most buyers spend $2,000–10,000+ furnishing a first home
- Utility setup: Deposits, first/last month for utilities, new service connections
- Lawn and maintenance equipment: If you’re moving from an apartment
Budget at least $3,000–5,000 for moving and immediate setup, and more if you’re furnishing a home from scratch.
Sources of Funds: What’s Allowed
Personal savings: The straightforward source. Savings accounts, checking accounts, money market funds.
Gift funds: Many programs allow gift funds from family members for down payment and closing costs. Must be documented with a gift letter stating the funds are a gift, not a loan.
Down payment assistance: State and local DPA programs provide grants or forgivable second mortgages for eligible buyers. Available in most states for buyers below certain income thresholds.
Retirement account withdrawals: 401(k) loans or hardship withdrawals are allowed but come with tax consequences and potentially penalties. Generally not the best option.
Proceeds from a prior home sale: If you’re a repeat buyer, equity from a sold home counts.
Not allowed: Borrowed funds that must be repaid (personal loans, credit card advances) are generally not acceptable for down payment unless specifically permitted by the loan program.
How to Estimate Your Total Number
- Identify your target price range (what you qualify for)
- Decide on loan type and down payment percentage
- Calculate down payment (price × %)
- Estimate closing costs (loan amount × 2.5% as a starting point; get actual estimates from lenders)
- Add 2 months PITI as reserve (get payment estimate from lender)
- Add $3,000–5,000 for moving/setup
- Total = your savings target
Frequently Asked Questions
Can the seller pay my closing costs? Yes — seller concessions are common. In a buyer’s market, sellers often agree to contribute 2–3% toward closing costs. This reduces your out-of-pocket at closing, though it doesn’t reduce what you need saved (because negotiations can fall through).
What if I have enough for down payment but not closing costs? Lender credits are an option — the lender pays your closing costs in exchange for a slightly higher interest rate. This eliminates closing costs out of pocket but costs more in the long run. Some buyers use this strategy to get into a home sooner and refinance later.
Does the earnest money deposit count toward my totals? Yes. The earnest money you pay when your offer is accepted is applied at closing toward your down payment and closing costs. It’s not an additional cost — it’s an advance payment counted in your total.
The Bottom Line
The true cash requirement to buy a home is almost always more than the down payment. Closing costs, reserves, and setup costs add 3–8% on top of the down payment — and that’s before furnishing or repairing a home. Know your real number before starting your search.
The best time to calculate this is 12–18 months before you want to buy, so you can save intentionally toward a specific target.
Next step: Ready to start saving? Read How to Save for a Down Payment for a practical savings plan.
Sources
- Consumer Financial Protection Bureau: Buying a House — Total Cash Needed — consumerfinance.gov
- Fannie Mae: HomeReady Eligibility and Requirements — fanniemae.com
- National Association of Realtors: 2025 Buyer and Seller Survey — nar.realtor
Disclaimer: Cost estimates are illustrative and vary by market, lender, and loan type. Get actual quotes from lenders in your area. HomeFinanceLab.com is not a lender and does not originate loans.
