House Down Payment Timeline
Example: Target home price: 400000 $ · Current down payment savings: 25000 $ · Monthly contribution toward down payment: 800 $ · HYSA APY on savings: 5 % · Target down payment: 20 %
| Months until down payment is ready | 55 |
| Down payment target | $80,000 |
| 20% PMI-avoidance threshold | $80,000 |
| HYSA interest earned while saving | $11,759 |
| Already at PMI threshold (1=yes) | 0 |
Worked example
Targeting 20% on a $400,000 home means saving $80,000. Starting from $25,000 with $800 a month in a 5% HYSA, you reach the goal in about 56 months — just under 5 years. The HYSA adds roughly $5,400 in interest along the way, shaving 4–5 months off the timeline vs saving in a 0% account.
Frequently asked questions
What is PMI and how much does it cost?
Private mortgage insurance protects the lender when you put down less than 20%. It typically costs 0.5–1.5% of the loan amount per year, added to your monthly payment. On a $320,000 loan that is $133–$400 a month — money that builds no equity. PMI cancels automatically when your loan-to-value drops to 80% under the Homeowners Protection Act.
Is it better to buy sooner with 10% down or wait for 20%?
Varies by your local market and rate environment. In a rapidly appreciating market, waiting can cost more in home price increases than PMI costs. In a flat market, avoiding PMI may be worth the wait. Run both scenarios: enter 10% as the target, note the timeline, then enter 20% — compare the PMI cost during the waiting period to the price appreciation risk.
Can down payment savings go into something other than a HYSA?
For timelines under 2 years, a HYSA or short-term CD is generally preferred — capital preservation matters more than yield when the goal is near. For timelines of 3–5 years, some buyers use a mix of HYSA and conservative bond funds. Avoid equity funds for a goal within 2 years; a market downturn could delay your purchase.
What other costs should I save for beyond the down payment?
Budget 2–5% of the home price for closing costs (lender fees, title insurance, escrow, transfer taxes), plus 1–3 months of mortgage payments as a post-purchase liquidity buffer. A full home-buying savings target on a $400,000 home might be $80,000 down + $12,000 closing costs + $6,000 buffer = $98,000 total.