Saving for a home is one of the biggest financial goals many people set — but it’s also one of the easiest to get wrong. First-time buyers often think it’s just about putting together a down payment, but the truth is more complicated. Closing fees, inspections, taxes, and ongoing maintenance can throw you off if you’re not ready.
It’s not just the down payment
Most buyers know they’ll need money upfront, but many underestimate how much. A 5% down payment on a $350,000 home is about $17,500. Add another 3% for closing costs — title fees, appraisal, insurance, and lender charges — and you’re closer to $28,000 before move-in. Make sure your monthly payment actually works for you by checking the total cost of borrowing across lenders. Don’t accept the first offer you’re given — seeing how lenders stack up can easily add up to tens of thousands in savings.
You’ll still need to save after you buy
Another myth: once you’ve closed, you can stop saving. In reality, homeownership comes with ongoing costs. Property taxes, insurance premiums, and maintenance can add thousands every year. A good rule of thumb is 1–3% of your home’s value annually for upkeep. On a $300,000 home, that’s $3,000–$9,000. Think roof leaks, a new AC, or a water heater that dies in January — none of it waits until you’re ready.
You don’t always need 20% down
Plenty of buyers delay because they think they need 20% down. Not true! Conventional loans can be as low as 5%, FHA requires just 3.5%, and VA programs allow 0% down for qualified buyers. While 20% helps you avoid PMI, waiting years to save that much can cost you more if home prices rise faster than your savings (and in reality, most homebuyers end up with some type of mortgage insurance-at least to start).
Don’t empty your account on day one
The riskiest move is draining every last dollar to close. Yes, you might get the keys — but with no reserves, even a small financial hiccup can push you into stress. A smarter play: keep three to six months of mortgage payments as a cushion. On a $2,000/month mortgage, that’s $6,000–$12,000 in an emergency fund. It buys you peace of mind and flexibility.
Don’t empty your account on day one
Saving for a home isn’t about chasing one big number. It’s about understanding all the costs, keeping a cushion, and making sure your plan matches reality. That means looking beyond just the purchase price: make sure your monthly payment actually works for you by testing how different rates and points change what you’ll owe. Don’t accept the first offer you’re given, and always look past the interest rate to compare APR and the total cost of borrowing. Step into homeownership prepared instead of surprised.
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