How much do you need to save to buy a home?

If you’re thinking about buying a home and haven’t done this in a while (or ever), you might be wondering how much savings you need to buy a house. This is a great first question to ask and the ideal way to start your home search on the right footing.

Picture this: You’ve browsed countless listings, attended numerous open houses and finally found your dream home. You even make an offer, and it gets accepted! But when you begin the loan process, you realize you haven't saved enough for the full range of expenses involved in purchasing a home. Before you know it, another buyer swoops in and snatches away your dream property.
When you're in the market for a home, it's wise to have all your "ducks in a row" before you make an offer. This means securing pre-qualification, understanding your price range, and – most importantly – making sure you've saved enough money. So, how much should you have saved up to buy a home in 2025? Let’s break down the various costs involved.

Down payment

To get a mortgage, you’ll generally need to make a down payment. Typically, the desired down payment is 20% of the home's purchase price. For instance, if you are buying a $400,000 home, you'll need $80,000 for a down payment. The good news: Today, there are loan options that require much less – just 3-5% down. Some programs, like Desert Financial’s First-Time Homebuyer Program¹ – offer options to skip a down-payment altogether.

• 3-5% down programs: For our $400,000 example, that means you’d need to save just $12,000-$20,000 instead of $80,000.

However, before you get too excited about saving a smaller amount, remember there are other costs to consider. Plus, there are major benefits to saving for a larger down payment. A 20% down payment not only reduces the amount of interest you'll pay over the life of the loan, but it also allows you to avoid Private Mortgage Insurance (PMI).

PMI is usually required by lenders until you've paid down 20% of the home's value, either through your down payment or your mortgage payments. VA loans available to qualified U.S. military service members, veterans, and eligible surviving spouses are the exception, as they don't require PMI.

First-time homebuyer programs

Buying a home can be expensive with a large down payment and other costs. However, there are programs available for first-time homebuyers that can help reduce these expenses. One of the key programs to consider is Desert Financial’s 

First-Time Homebuyer Program, which offers great benefits, such as:

•    No down payment
•    Fixed and variable rates available
•    No area median income limits
•    Competitive rates
•    Closing cost credit (up to $7,500) through the Home Plus Program²
•    Local servicing of your loan³

Desert Financial also offers the Community Heroes First-Time Homebuyer Program, specifically designed for education workers, military members, medical workers, first responders and government/civil servants. This program offers all the perks of the standard First-Time Homebuyer Program, plus no PMI requirement.

You can find more information on these programs and others available to first-time homebuyers in our blog.

Closing costs

Closing is the final step in purchasing a home, where ownership is transferred. At this point, you’ll sign the necessary documents and pay the associated fees, known as closing costs. These can include taxes, title insurance, attorney fees and home appraisals.

Expect closing costs to be around 1-3% of the home’s purchase price (for our $400,000 example, that’s $4,000-$12,000). The exact amount will depend on factors like the loan type, your credit score and loan details.

Tip: Some mortgage programs allow family and friends to help with these costs, but you’ll need to document their contributions (e.g., with check copies or wire transfer proofs).

Home inspection

Though not required, most buyers opt for a home inspection so they know exactly what they’re getting into before purchasing. Inspections typically cost between $300-$500 and are paid at the time of inspection. They’ll help you identify potential issues, which might influence your decision to buy or renegotiate repairs with the seller.

Tip: Keep in mind that home inspections generally don’t cover everything. If you need additional inspections for things like pests or mold, those will incur extra fees.

Home appraisal

Lenders require a home appraisal to assess the value of the property before finalizing your loan. Appraisal costs in Arizona can vary depending on the property size, location and market conditions. You’ll generally pay for this upfront or as part of your closing costs. You typically can ask your real estate agent for an appraiser recommendation (you should verify their credentials in the national registry).

Additional costs

There are other costs to consider when buying a home, including:

•    Moving expenses 
•    Repairs and renovations
•    Furniture and décor

Tip: It’s easy to overlook these expenses, but having extra savings for moving costs, repairs and decorating will help you avoid feeling “house poor” once you move in.

Home sweet home

Saving up for a home can feel like a daunting task, but with a clear understanding of the costs involved, you can prepare effectively. To stay on track, consider setting up a separate savings account for your home purchase, keeping those funds dedicated to this goal. When you're ready to start shopping, you’ll be in great shape. With your savings in place, you'll only need to get pre-approved, find your dream home and start planning all the fun that comes with your new space! 

Getting a home loan with Desert Financial?  It’s easier than you might expect!