How Much Money Do I Need to Buy a House?

Wondering how much money you need to buy a house? You’ve come to the right place!

Buying a house can come with a lot of hidden expenses that are easy to overlook until closing day. So, to make sure you save up the right amount, we’ll show you how much money you need in the bank to make your home-buying process as smooth as Tennessee whiskey (hat tip to Chris Stapleton).

How Much Money Do You Need to Buy a House?

A good number to shoot for is saving 25% of the sale price, in addition to setting aside 3–6 months’ worth of your typical expenses for emergencies. So if you’re looking to buy a $300,000 house, you should save around $75,000 (on top of your emergency fund).

But it’s difficult to give a hard-and-fast answer for how much money you need to save for a home, since the right amount depends on a few different factors—like how big of a home you want to buy, whether you’re a first-time home buyer, and how far you’re planning to move.

So, to make sure you know exactly how much you should save for your individual situation, let’s talk through the three biggest home-buying costs: your down payment, closing costs and moving expenses.

How Much Money Do I Need for a Down Payment?

You should aim for a down payment of at least 20%. Why? For starters, a 20% down payment will keep you from having to pay for private mortgage insurance (PMI). That will save you big-time money, since PMI is a yearly fee that runs about 1% of your loan balance. Plus, a bigger down payment means smaller monthly payments and less debt.

For first-time home buyers, a 5–10% down payment is okay, but be ready to pay for PMI. And any down payment amount less than 5% is way too low. Some government-insured programs (like FHA, VA and USDA loans) make it easier to buy a house with little to nothing down. But going that route will have you paying so much extra in interest and fees, you’ll sink your overall financial plan.

No matter how much money you decide to put down, make sure you don’t wind up in a house you can’t afford. Your monthly payment (including taxes, homeowners insurance and HOA fees) on a 15-year fixed-rate mortgage should be no more than 25% of your take-home pay.

Why? If you spend any more than that, you’ll risk not having enough money left over in your budget each month to put toward other important financial goals—like saving for retirement. And if you go with a 30-year mortgage, you’ll wind up paying tens of thousands in extra interest while staying in debt for an extra decade and a half.

But the best way to buy a home is paying for it in cash. Yep, a 100% down payment. Don’t believe it’s possible? Lots of folks go that route—28% of the existing homes sold in April 2023 were purchased without a loan.¹ Think of all the money those buyers saved on interest!

Regardless of whether you go that route or use a mortgage, you should not buy a house or start saving for one if you’re already in debt. That’s a recipe for a big-time financial headache. So, pay off your debt and build up an emergency fund first. Then, you can start saving to buy a house. Think about how much easier that’ll be without all those payments.

How Much Money Do I Need for Closing Costs?

The term closing costs refers to fees for services that help to officially close the deal on a house. For buyers, closing costs usually include . . .

• Home inspection
• Appraisal
• Origination fees
• Title insurance
• Homeowners insurance
• Taxes

How much does all that cost? Home inspections average $341, and appraisals are typically around $354.^2,3 Everything else on the list will be a lot pricier.

See how much house you can afford with our free mortgage calculator!

When you put all your closing costs together, they will probably add up to about 3–4% of the home’s sale price.⁴ That’s how much you should prepare to pay.

How Much Money Do I Need for Moving Expenses?

Now, if you’re able to bribe enough friends and family members with pizza to help you move all your stuff for free, then you can skip this part! But if not, you likely will be on the hook for some moving costs. While moving expenses aren’t nearly as pricey as the other costs we’ve gone over, you also won’t be able to cover them with the spare change in your couch cushions.

The amount you pay in moving costs will depend on how you decide to handle your move. If you choose to hire movers, plan to pay around $1,700.⁵ However, if you go the DIY route and simply rent a moving truck, your cost will go down.

If you’re looking for a super convenient way to manage your move, using PODS is a great option—whether you’re moving across town or across the country.

They’ll drop off one of their moving and storage containers at your current address and give you all the time you need to load it up with your stuff. Then, they’ll pick it back up and deliver it to your new place. Much better than trying to cram everything in Nana’s minivan or tie it all down to the bed of Grandpa’s truck.

Example of How Much Money to Save for a House

Now that we’ve crunched all the numbers, let’s look at an example. If you were planning to buy a $250,000 house and put 20% down so you can avoid paying PMI, here’s how much you’d need to save up:

Home Price: $250,000	Cost	Percentage of Home Price
Down Payment	$50,000	20%
Closing Costs	$10,000	4%
Moving Expenses	$1,650	<1%
Total Buying Costs	$61,650	25%

Just keep those percentages in mind, apply them to your individual situation, and you’ll be in the clear!

The Best Way to Prepare for Buying a House

Once you’ve got the right amount of money saved up and you’re finally ready to buy a house, there’s one more step you can take to make sure you’re super prepared: getting a top-notch real estate agent on your side.

We make it easy for you to do just that with our RamseyTrusted program. Our RamseyTrusted agents are high performers in your area who will make it their mission to help you find a home while keeping all your other financial goals in balance.

Find a RamseyTrusted agent in your area.

Frequently Asked Questions