The hardest part of the "how long until I can buy" question is that home prices keep moving while you save. Saving for a 20% down payment on a $400K home (target: $80K) takes a lot longer if the home you are saving for will cost $475K by the time you buy. This planner accounts for price drift and investment returns on your savings.
Worked example: Target 10% down on a $400K home = $40K. You save $1,200/mo and invest savings at 5%. Home appreciates 3%/year. At that pace you hit target in 33 months, by which point the home costs $432K (so actual 10% target is $43.2K). You'd hit that number in month 36.
How much do you actually need down?
- Conventional: 3% minimum (HomeReady/HomePossible), 5% standard, 20% to skip PMI.
- FHA: 3.5% with 580+ FICO.
- VA: 0%
- USDA: 0%
- Jumbo: 10-20%
Beyond down payment, budget 2-5% for closing costs and 2 months of PITI in reserves. Total cash needed on a $400K FHA purchase with 3.5% down: $14K down + $12K closing + $5K reserves = roughly $31,000.
Where to park down payment savings
- High-yield savings. 4-5% APY in 2026. Safe, liquid, slightly behind inflation.
- Short-term Treasuries or T-bill ETFs (BIL, SGOV). 4.5-5%, slightly better tax treatment in high-tax states.
- CD ladder. 3-12 month rungs. Slightly higher rate but less liquid.
- Stock market. Only if timeline is 3+ years and you can tolerate a 20-30% drawdown right before you're ready to buy. Most planners advise against.
Can you use gift funds or DPA to speed this up?
Yes. Family gifts are allowed on all loan types with proper documentation (gift letter, proof of transfer). Down payment assistance (DPA) programs in most states offer 3-5% grants or forgivable loans for first-time buyers. Employer-assisted housing programs, first-responder programs, and Native American programs (Section 184) add more options. See our first-time buyer readiness checklist for a full stack-able list.