Saving for a home down payment in today’s real estate market can be challenging, but choosing the right assets can help boost your balance. Financial advisors recommend keeping short-term goal money out of the market, while also protecting your balance for intermediate-term goals. Understanding how much money you need for a down payment can help you plan and choose the appropriate assets.
For example, the median sales price of U.S. homes is $412,300 as of the second quarter of the year. Depending on the down payment percentage, you might need to save between 5% to 20% of the home price. While a 20% down payment is traditional, it’s not mandatory, as some loans require less down payment or offer assistance programs.
To grow your down payment savings safely, consider some options like CDs, Treasury bills, high-yield savings accounts, and money market funds. CDs offer a fixed interest rate for a set period, while Treasury bills provide a guaranteed return backed by the U.S. government. High-yield savings accounts earn a higher interest rate than traditional accounts and are easily accessible. Money market funds offer slightly higher yields than HSAs but are not insured by the FDIC.
Ultimately, the key is to assess your timeline, savings goal, and liquidity needs to determine which asset is the best fit for your down payment savings. Consulting with a financial advisor can help you make informed decisions and reach your home-buying goals.
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