One of the first questions I hear from future homeowners is:
“Lisa, how much money do I actually need to buy a house?”
And my answer is usually: probably not as much as you think.
A lot of people still believe they need 20% down before they can buy a home. On a $400,000 house, that would be $80,000!
Thankfully, 20% down is not required for the majority of buyers.
Depending on the loan you qualify for, you may be able to buy with 0%, 3%, 3.5%, or 5% down. And your down payment does not always have to come entirely from your own savings.
There may be gifts, grants, employer programs, community programs, and other homebuying resources available to help. Depending on your retirement plan and its rules, you may also be able to use funds from a 401(k) or other retirement account toward your home purchase.
So instead of asking, “Do I have 20% saved?” let's look at the real costs of buying a home and how much money you may actually need.
1. How Much Down Payment Do You Need to Buy a House?
Your down payment is the portion of the home's purchase price that you pay upfront.
The rest is financed with your mortgage.
How much you need depends in large part on the type of mortgage you use.
VA Loan — As Little as 0% Down
For eligible veterans, active-duty service members, and certain surviving spouses, a VA loan may allow you to finance up to 100% of the home's value, subject to VA and lender requirements.
That means an eligible buyer may not need a down payment at all.
USDA Loan — As Little as 0% Down
USDA loans can also offer 100% financing for eligible buyers purchasing eligible properties. There are household income and property-location requirements.
And don't let the word “rural” automatically scare you away. Some eligible areas may be closer to major communities than you think.
Conventional Loan — As Little as 3% Down
Some qualified buyers can purchase with as little as 3% down.
On a $400,000 home, 3% is $12,000.
At 5% down, it would be $20,000.
You do not automatically need $80,000 just because you're buying a $400,000 home.
FHA Loan — As Little as 3.5% Down
FHA loans are popular because they can offer more flexibility with credit and debt-to-income ratios than some conventional programs.
On a $400,000 home, a 3.5% down payment would be $14,000.
Every loan has its own qualification rules, so the lowest down payment option isn't automatically the best option.
The goal is to find the financing that makes the most sense for you.
2. What Does Loan-to-Value (LTV) Mean?
You may hear your lender use the term LTV, which stands for loan-to-value.
It sounds complicated, but it really isn't.
If you purchase a $400,000 home and borrow $380,000, your loan is 95% of the purchase price.
That means you have a 95% loan-to-value, or 95% LTV.
Put another way:
Purchase Price: $400,000
Down Payment: $20,000 (5%)
Loan Amount: $380,000 (95%)
Loan-to-Value: 95%
Generally, the more money you put down, the lower your LTV.
Why does that matter?
Because your loan-to-value can affect things like your loan options, mortgage insurance, and sometimes your interest rate.
But don't get stuck on the idea that putting more money down is always the best decision.
Putting every dollar you have into the down payment may leave you without money for emergencies, moving expenses, repairs, or just life.
Sometimes keeping money in the bank is just as important as putting more money down.
3. Don't Forget About Closing Costs
Your down payment is only one part of the money you may need to buy a house.
There are also closing costs.
Closing costs can include things such as:
Appraisal
Lender and processing fees
Title and escrow fees
Homeowners insurance
Prepaid property taxes
Prepaid interest
Recording fees
Other costs connected to the loan and property
A common planning range is roughly 2% to 5% of the purchase price, but your actual costs can be higher or lower depending on your loan, property, location, insurance, taxes, and other factors.
Here's another important point:
You may not have to pay all of those costs yourself.
Depending on your loan and the transaction, the seller may be allowed to contribute toward some of your eligible closing costs.
That is why I don't like giving buyers one big number before I've actually looked at their situation.
There are too many ways to structure a home purchase.
4. Your Down Payment Doesn't Always Have to Come From Your Savings
This is one of the biggest surprises for many buyers.
You may have more resources available than you realize.
Depending on the loan program and eligibility requirements, money for your home purchase could potentially come from several sources.
Gift funds. A qualified family member or another acceptable donor may be able to give you money toward your down payment or closing costs.
Grants. Some homebuyer programs provide money to eligible buyers that may not have to be repaid as long as program requirements are met.
Down payment and homebuyer assistance programs. State, local, nonprofit, housing agency, and other programs may help qualified buyers with some of the upfront costs of purchasing a home.
Employer assistance. Some employers offer homebuying benefits or financial assistance to employees.
Community programs. Certain cities, counties, nonprofits, and community organizations offer resources designed to help people become homeowners.
401(k) and other retirement accounts. Depending on your retirement account and plan rules, you may be able to access some of those funds for a home purchase. There can be taxes, penalties, repayment requirements, or other financial consequences, so this is something to review carefully with your plan administrator and financial or tax professional before making a decision.
Special programs for certain professions or groups. Veterans, first responders, educators, healthcare workers, union members, and others may have additional homebuying resources available depending on where they live and work.
There may also be opportunities to layer resources when program rules allow it.
That means we don't just look at how much money you personally have sitting in your savings account.
We look at the entire picture and ask:
What resources are available to help you reach your goal?
5. Don't Empty Your Bank Account to Buy a House
This is a big one for me.
Getting the keys shouldn't leave you with $37 in your checking account.
Homeownership comes with surprises.
The water heater doesn't care that you just closed on your house. Neither does the air conditioner.
You may also need money for:
Moving
Utility deposits
Furniture
Appliances
Small repairs
Yard work
HOA expenses
Unexpected emergencies
Whenever possible, I want buyers to have some money left after closing.
That's your emergency reserve.
There isn't one perfect amount for everyone. Having a few months of housing expenses set aside can provide a helpful cushion, but even starting with a smaller reserve is better than having nothing.
Your mortgage plan should work after you get the keys, not just on closing day.
6. Let's Look at a Simple Homebuying Example
Suppose you're buying a $400,000 home using an FHA loan with a 3.5% down payment.
Your basic down payment would be:
$400,000 × 3.5% = $14,000
But that does not automatically mean you need to personally bring $14,000 plus every closing cost from your own bank account.
For example, depending on eligibility and program rules, you might have:
Your savings: $5,000
Gift from family: $5,000
Homebuyer resource or grant: $10,000
Seller contribution: Helps cover eligible closing costs
Suddenly, the conversation looks very different.
This is only an example—not a promise that every buyer or transaction can be structured this way.
The important part is understanding that we should explore your options before deciding you can't afford to buy a home.
7. What If You Don't Have Much Money Saved Yet?
Then let's start there.
You don't need to wait until everything is perfect before having a conversation with a lender.
In fact, I would much rather talk with you early.
Maybe you're ready now.
Maybe you're six months away.
Maybe we discover that improving your credit, paying off one debt, saving another $2,000, or finding the right homebuyer resource could put you in a much better position.
That's useful information because now you have a plan.
A good homebuying plan should answer three questions:
How much can I comfortably afford each month?
How much will I actually need to bring to closing?
How much money will I have left after I buy the home?
Notice that I said comfortably afford — not simply the maximum amount a lender may approve.
Those are two very different things.
So, How Much Money Do You Really Need to Buy a House?
There isn't one answer that fits every buyer.
And you do not automatically need 20% down.
Depending on your situation, you may have access to:
0% down VA financing
0% down USDA financing
3% down conventional financing
3.5% down FHA financing
Gift funds
Grants
Homebuyer assistance programs
Employer or community resources
401(k) or other eligible retirement funds
Seller contributions toward eligible closing costs
The real question isn't:
“Do I have enough money to buy a house?”
It's:
“What would it take for me to buy a house comfortably?”
That's the conversation I want you to have before you count yourself out.
Buying a home is not about draining your savings just to say you own one. It's about creating a plan that gets you into the home and leaves you in a healthy financial position once you're there.
Let's Figure Out Your Number
If you're thinking about buying a home but aren't sure how much money you'll need, let's figure it out together.
You don't have to be ready to buy tomorrow. You don't need to know which loan program you need. And you certainly don't need to have everything figured out before we talk.
We'll look at where you are today, what monthly payment feels comfortable, how much you have available, and what loan programs or homebuying resources may make sense for your situation.
Schedule a 20-minute consultation with me and let's build your homebuying plan.
Schedule Your 20-Minute Consultation
You may be closer to homeownership than you think.
Loan programs, down payment requirements, seller contributions, grants, gifts, retirement funds, and assistance programs are subject to eligibility requirements, loan guidelines, property requirements, plan rules, and availability. Examples are for educational purposes only and are not a commitment to lend.