Happy New Year 2025! If one of your resolutions is to save for a down payment, please know that you’re not alone.   

Yet saving for a down payment may feel overwhelming. In fact, 40% of aspiring homeowners claim that affording a down payment and closing costs are among their greatest homebuying obstacles.  

Fortunately, with some strategy, you can prepare to cover a sizable down payment.  

How much money do I need for a down payment? 

Most buyers need to put at least 3% down for a conventional loan. This means that for a $400,000 home here in Pennsylvania, you will need to save $12,000 for your down payment. However, putting a standard 20% down comes with certain benefits. Buyers who save this amount can forego private mortgage insurance (PMI) and enjoy a lower principal balance. 

 But overall, there’s a certain level of flexibility involved in how much money you need to put down on your new home. And most mortgages have accessible minimum down payment requirements: 

Conventional loans 

Again, many conventional loans let buyers put down just 3% of the purchase price. Please note that you will need to pay your monthly PMI premium until you reach 20% equity in the home. 

 FHA loans 

Some loans are insured by the Federal Housing Administration (FHA) and only require 3.5% down. That said, you’ll need a credit score of 580 to be approved for an FHA loan, or 500 if you put 10% down. 

VA and USDA loans 

Homebuyers who meet the criteria for loans from the U.S. Department of Veterans Affairs or the U.S. Department of Agriculture won’t need a down payment at all. 

 With the right approach, covering your down payment should be well within reach. Take a moment to review your budget and explore easy ways to start saving. 

Tips to save for a down payment 

Allocating even a small amount of money toward your savings goal each month can go a long way. Consider the following tips for covering your down payment. 

Crunch some numbers 

First, determine how much house you can afford. Then, calculate how much money you’ll need for your down payment. From there, you can assess how long it will take for you to reach your savings goal. 

Open a high-yield savings account 

High-yield savings accounts (HYSAs) pay significantly more interest than your typical savings account. Some online banks are paying 4–5% for HYSA customers, which adds up quickly each month. 

 Many homebuyers also save for a down payment by investing in money market accounts and certificates of deposit (CDs), which can also bring solid returns. 

 Automate your savings 

Want to save for a down payment with minimal effort? Think about automatically saving a certain amount from each paycheck, and schedule deposits right into your savings account. This will conserve mental energy without sacrificing the amount you stash away.  

Lower your expenses 

Cutting back on your spending is simpler than you think. Start by making a list of your subscription services and eliminating those you don’t really use, or commit to eating out less frequently. In some cases, you can even negotiate down expenses like car insurance or your cell phone bill.  

Embrace new income streams 

There’s absolutely no harm in requesting a raise, as the worst thing your employer can say is no. However, you may also consider a side gig like food delivery driving, dog walking, or housesitting. Additional sources of income can open the door to faster, easier savings. 

These are just some of the saving strategies we recommend for your down payment. Plan to incorporate some or all of them into your routine, and make 2025 the year you find your perfect home in Pennsylvania.

Purchase your new home with Berks 

Are you curious about what it takes to join our happy homeowners and purchase your very own Berks home? Our Online Sales Consultants, Kelly & Chastity, are here to answer any questions. For your convenience, we have also compiled a list of financing resources. 

 If you’re ready to start your homeownership journey, please know that the Berks Homes Realty team is here to answer any questions you may have. Contact us at 484.772.2693 / helloOSC@berkshomes.com.