Aim to spend 28% or less of your income on housing

What’s your house-buying budget?

The first step in how to save for a house is deciding how much house you want to buy. Gone are the days when a 20% down payment was the norm. But a down payment isn’t the only cash you’ll need when the time comes to close on a house. And there are long-term costs to consider, as well.

Immediate costs

When it’s time to close, here are things you’ll need money for:

  • Down payment (including earnest money)
  • Closing costs
  • Moving expenses
  • Inspections


Long-term costs

These costs can exist throughout your mortgage, and may change over time:

  • Homeowner’s insurance (possibly in an escrow account)
  • Property taxes (possibly in an escrow account)
  • Private mortgage insurance (PMI)
  • Utilities, repairs and maintenance


How much house is affordable?

A standard rule for lenders is that your monthly housing payment should not take up more than 28% of your income. However, home affordability is about more than just how much you can borrow.


Do some calculating.

Use our mortgage affordability calculator to get a basic idea of how much you can afford to spend on a home. You can make calculations based on either your income or how much you’d like to pay each month.


What other costs are there?

When you become a homeowner, your mortgage payment won’t be your only expense. Here are some other costs that you — and your bank account — need to be ready to handle.

Let’s get you closer to a new home.

Prequalification helps you see how much you might be able to borrow.

6% is the average down payment of a first-time home buyer

How much cash will you need up front?

Once you have an idea of how much house you can afford, figuring out how much to save for a down payment is a little simpler (6% is the average down payment of a first-time homebuyer1). As you make your calculations, it could be worthwhile to look into payment assistance programs, or if your lender offers existing customer credits.


What are closing costs?

Although you’ll pay them at the same time, closing costs are separate from your down payment. Closing costs cover the fees, taxes, and other expenses required to process your home purchase.


What’s a typical down payment amount?

Generally, the more you put down, the lower your interest rate and monthly payment. To get your lowest interest rate, having a down payment of 20% or more is typical. But having that much for a down payment isn’t required.


What is down payment assistance?

Down payment assistance can include loans, grants, tax credits and other programs designed to help eligible homebuyers cover down payment or even closing costs. There are many options available.


What are FHA vs conventional loans?

There are many mortgage loan choices, yet the most popular for homebuyers are conventional loans and government-backed Federal Housing Administration (FHA) loans. So what’s the difference between them?

Make homeownership a reality.

An experienced loan officer is just a call or email away.

Make your plan to save for a house.

Depending on your timeline, cutting back on vacations and eating out aren’t the best ways to save for a house. Instead, make a plan and be strategic.


What you need to know about debt consolidation

Consolidating debts can help you repay them faster, lower your interest rates and improve your credit. Determine if debt consolidation may be a good financial move for you, and how to get started.


How to pay down credit card debt

Along with saving for a down payment, having a good relationship with credit is important in buying a home and qualifying for the best interest rates. Here are some tips on paying down your credit card debt.


How to buy a house with low income

There’s not a specific minimum income to qualify for a mortgage. Plus, there are various loan types and programs designed to help eligible buyers cover a down payment or even closing costs.

Accounts to get you started

There are a few types of accounts to choose from when it comes to saving money for a down payment on a house. Standard savings accounts and CDs (certificates of deposit) are just two such options.

Have you found a home you love? Start your application process.

We’ll confirm your personal and financial information, pull your credit, and then a mortgage loan officer will connect with you about the results.

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.

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  1. From the article “Before making a 20% down payment, read this”, published May 6, 2021, by Dan Green and The Mortgage Reports.

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