Down Payment Dilemma: How Much Do You Need to Save for a Home?

With housing prices at record highs, saving for a down payment can feel overwhelming and even unattainable for first-time home buyers.

Nationwide, the median sale price is now five times the median household income, and home prices are up 47% since early 2020, according to the Case-Shiller National Home Price Index.

Americans now must be extra financially savvy when it comes to budgeting for a down payment. But much money is actually needed for first-time home buyers to save up for a down payment on a home?

In order to find out, we analyzed the median home price in June 2024 across the nation’s 170 most populated cities. From there, we calculated how much buyers would need to save annually as well as daily over a five-year period to afford a 15% down payment on a home. According to the National Association of Realtors Home Buyers and Sellers Generational Trends report, the nationwide median down payment is 15%.

Key highlights

With a 15% down payment, Americans would need to save $12,624 per year, or $34.59 daily, over the next five years to afford the current median home price.
The top three most affordable markets for a 15% down payment are Jackson, Mississippi ($9,602.10), Detroit, Michigan ($10,868.55), and Cleveland, Ohio ($16,581.75).
Located in the Bay Area’s Silicon Valley, Sunnyvale, California, is home to the most expensive 15% down payment in the nation at $315,312.75.
According to our nationwide survey, 47% of renters feel they’ll never be able to own a home.
Nearly half (46%) of renters say they have zero savings for a down payment.

Down Payment Savings: How Much Is Enough to Buy a Home?

Historically, the standard amount for a down payment has been 20%. However, it’s become more common to put down less. Today, the average down payment is 15%, according to a 2024 study by the National Association of Realtors.

There are additional ways to put down less, such as a conventional loan, which can be as low as 3 percent, or a Federal Housing Administration (FHA) loan, which requires only 3.5 percent. Another alternative is a loan from the U.S. Department of Veterans Affairs (VA loan), which does not require any down payment.

Regardless of how much buyers put down, it’s clear that it’s more difficult than ever to afford a home. But with a strict and dedicated savings plan, owning a home isn’t completely out of reach. Among the 170 cities within our analysis, one-third require saving $25 per day or less in order to afford a down payment within five years.

Here’s a closer look at how much buyers would need to save throughout a five-year period in cities across the country:

#1. New York City, New York

Median home value: $742,930
Down payment: $111,439.50
Annual saving goal (5 years): $22,287.90
Daily saving goal (5 years): $61.06

#2. Los Angeles, California

Median home value: $967,128
Down payment: $145,069.20
Annual saving goal (5 years): $29,013.84
Daily saving goal (5 years): $79.49

#3. Chicago, Illinois

Median home value: $298,397
Down payment: $44,759.55
Annual saving goal (5 years): $8,951.91
Daily saving goal (5 years): $24.53

#4. Houston, Texas

Median home value: $271,476
Down payment: $40,721.40
Annual saving goal (5 years): $8,144.28
Daily saving goal (5 years): $22.31

#5. Phoenix, Arizona

Median home value: $431,920
Down payment: $64,788
Annual saving goal (5 years): $12,957.60
Daily saving goal (5 years): $35.50

#6. Philadelphia, Pennsylvania

Median home value: $225,159
Down payment: $33,773.85
Annual saving goal (5 years): $6,754.77
Daily saving goal (5 years): $18.51

#7. San Antonio, Texas

Median home value: $261,501
Down payment: $39,225.15
Annual saving goal (5 years): $7,845.03
Daily saving goal (5 years): $21.49

#8. San Diego, California

Median home value: $1,035,332
Down payment: $155,299.80
Annual saving goal (5 years): $31,059.96
Daily saving goal (5 years): $85.10

#9. Dallas, Texas

Median home value: $319,020
Down payment: $47,853
Annual saving goal (5 years): $9,570.60
Daily saving goal (5 years): $26.22

#10. Austin, Texas

Median home value: $548,654
Down payment: $82,298.10
Annual saving goal (5 years): $16,459.62
Daily saving goal (5 years): $45.09

How to Save for a Down Payment

According to our nationwide survey, nearly half (46%) of renters say they have zero savings for a down payment. If you’re starting from zero or very little savings, it’s a good time to start prioritizing how you can save for a down payment on a home.

Potential buyers can put their money into a high-yield savings account or a money market fund to start generating interest on their savings. If you’re not sure where to start when it comes to investing, you can read our beginner’s guide to mutual funds. Additionally, take a close look at your monthly budget and identify any spending that you can cut back on and put toward savings.

For example, if you’re currently contributing to a 401(k) or an IRA, consider temporarily reducing your contributions in order to save up for a down payment.

Cities with the Highest Home Price-to-Income Ratios

Saving for a down payment is only one aspect of homeownership. Homeowners have to continue making monthly mortgage payments, which can feel like a daunting task when the median sale price is now five times the median household income, and in some cities, it’s 15 times higher.

Considering the state is home to some of the highest home prices in the nation, it’s probably no surprise that cities in California dominate the list of places with the highest home price-to-income ratios.

In particular, the Los Angeles area tops the list. Glendale, California, has the highest home price-to-income ratio in the country at 15.5. In Glendale, the median household income is $77,483, while the median home price is 15 times higher at $1,202,850.

#1. Glendale, California

Median home price: $1,202,850
Median household income: $77,483
Home price-to-income ratio: 15.5

#2. Los Angeles, California

Median home price: $967,128
Median household income: $76,135
Home price-to-income ratio: 12.7

#3. Irvine, California

Median home price: $1,534,239
Median household income: $123,003
Home price-to-income ratio: 12.5

#4. Sunnyvale, California

Median home price: $2,102,085
Median household income: $169,781
Home price-to-income ratio: 12.4

#5. Huntington Beach, California

Median home price: $1,313,305
Median household income: $111,122
Home price-to-income ratio: 11.8

#6. San Jose, California

Median home price: $1,479,487
Median household income: $133,835
Home price-to-income ratio: 11.1

#7. Garden Grove, California

Median home price: $953,655
Median household income: $86,975
Home price-to-income ratio: 11.0

#8. Anaheim, California

Median home price: $917,043
Median household income: $85,133
Home price-to-income ratio: 10.8

#9. Oceanside, California

Median home price: $879,236
Median household income: $83,271
Home price-to-income ratio: 10.6

#10. Long Beach, California

Median home price: $844,057
Median household income: $80,493
Home price-to-income ratio: 10.5

Keep in mind there are additional costs of owning a home outside of your monthly mortgage payment such as maintenance, property taxes, home insurance, which can all add up quickly. Make sure you’re factoring in these expenses before jumping into the market to buy a home.

In the current real estate market, it’s easy to feel overwhelmed by the lack of affordable housing. However, with careful planning, owning a home can still be a realistic goal if you’re willing to make changes to your spending habits, lifestyle, and savings goals.

Methodology

To determine our ranking, we examined the median home price in June 2024 across the nation’s 170 most populated cities. From there, we calculated how much buyers would need to save annually as well as daily over a five-year period to afford a 15% down payment on a home in each city. According to the National Association of Realtors Home Buyers and Sellers Generational Trends report, the nationwide median down payment is 15%. To determine the home price-to-income ratio, we analyzed the median home price as well as median household income, according to the U.S. Census Bureau American Community Survey 2022, which is the most recent data available.

In June 2024, we conducted a nationwide survey of 1,500 Americans to gain insight into housing affordability. The survey respondents included 37% males, 60% females, and 3% identifying as non-binary/non-conforming. The average age of respondents was 39 years. The survey responses rely on self-reporting, which may be subject to recall bias or social desirability bias. The collected data underwent quantitative analysis to identify trends, patterns, and correlations related to housing affordability.

Sources: U.S. Census Bureau’s American Community Survey, Zillow, National Association of Realtors, ResiClub, Case-Shiller National Home Price Index, Federal Reserve Bank of St. Louis

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