How Much Should You Really Save for a Down Payment?

Jackie Hauer
Jul 2
2 min read

If you’re thinking about buying a home, one of the first questions you’ve probably asked is:“How much do I need to save for a down payment?”

The answer? It depends. While the old rule of thumb was 20%, today's buyers have more flexible and realistic options—especially if you're a first-time homebuyer.

Let’s break it down so you can plan smart, save with purpose, and buy with confidence.

The Traditional 20% Rule: Still a Good Idea?

Putting down 20% of the home’s price used to be the gold standard. Why?

It helps you avoid private mortgage insurance (PMI)
You’ll have lower monthly payments
You start with instant equity in your home

But saving 20% on a ₱5,000,000 ($100,000 USD) home = ₱1,000,000 ($20,000), which isn’t doable for everyone.

The Truth: You Don’t Have to Put Down 20%

Most buyers today don’t put down 20%. In fact:

The average down payment for first-time buyers in 2024–2025 was around 6–8%
Repeat buyers often put 10–15%
Some loans require as little as 3% or even 0%

Common Loan Types & Down Payment Requirements

Loan Type	Minimum Down Payment
Conventional Loan	3%–20% (PMI under 20%)
FHA Loan	3.5% (for credit scores ≥580)
VA Loan	0% (for eligible veterans)
USDA Loan	0% (rural properties only)
Jumbo Loan	10%–20% (varies by lender)

How Much Should You Save?

The real answer depends on your:

Budget and home price range
Loan type you’re eligible for
Monthly comfort zone for payments
Emergency fund — you should still have savings left after closing

Pro tip:Plan for at least 3–5% down, plus 2–5% more for closing costs, moving expenses, and setup costs.

So if you’re buying a ₱4,000,000 home:

Minimum down payment (5%) = ₱200,000
Estimated closing costs (3%) = ₱120,000
Total savings goal = ₱320,000 minimum

Should You Put Down More If You Can?

Benefits of putting more than the minimum:

Lower monthly payments
Less interest paid over time
No PMI if you reach 20% down
Better loan approval odds and interest rates

But if it drains your entire savings, it might not be worth it. It’s all about balance.

Final Thought

There’s no “one-size-fits-all” answer. You can buy a home with as little as 3% down, but having a smart savings strategy and knowing your options makes all the difference.

Need help determining your best down payment strategy? I’d be happy to connect you with a trusted lender and help you run the numbers based on your goals.