GrowthCalc › House Down Payment Savings Calculator
House Down Payment Savings Calculator: how it works
Saving for a deposit is a short race, not a marathon, and that changes the rules. Money you need within five years should not ride the stock market, because a 30 percent drop the year you want to buy cannot be waited out. The right benchmark is a high-yield savings account or short-term bonds, so the return you type here should be modest.
The preset assumes $15,000 already saved, $1,200 a month added, a 4.5 percent yield compounded monthly, and a five-year horizon. On those numbers the balance comes to just under $100,000 by the end of year five, close to a 20 percent deposit on a $500,000 home; adjust the figures to your market.
How much deposit, and when
Set your target first. A 20 percent deposit avoids mortgage insurance in the US and gets better rates in most countries, but 5 to 10 percent programmes exist and may get you in sooner, at a higher monthly cost. Add closing costs (typically 2 to 5 percent of the price) and a cushion for moving and repairs; the deposit is rarely the whole bill.
- Use the yearly table to see the first year your balance clears the target.
- Try a 3 percent return as a stress test: if the plan only works at 5 percent, it depends on rates staying high.
- GrowthCalc Pro's goal mode solves the reverse question: the monthly saving needed to hit a target by a given year.
Where to keep a down payment fund
For a two-to-five-year horizon the usual options are a high-yield savings account, a money market fund, a CD or bond ladder matched to your buying date, or a government savings scheme if your country has one for first-time buyers (several add a bonus or tax relief that beats any interest rate). Keep the money separate from your everyday account so it is not spent, and automate the monthly transfer the day after payday.
Interest on savings is usually taxable, so the after-tax yield is a little lower than the number on the bank's website. This page is educational, not personal financial advice.
Frequently asked questions
How long will it take to save a $60,000 down payment?
Saving $1,200 a month at 4.5 percent from zero takes a little under four years; starting with $15,000 already saved shortens it to about three. Enter your own figures to see the exact year in the table.
Should I invest my down payment in stocks?
Generally not for money needed within five years. Short-term goals suit savings accounts and short bonds, where the return is lower but the balance is predictable.
Does the calculator account for rising house prices?
Not directly. Switch inflation on and set it to your local house price growth to see your balance in terms of today's prices.
Can I include a one-off bonus or gift?
Add it to the initial investment, or save the plan as a scenario and create a second one with the higher starting balance to compare.
Looking for the full guide, tips and the complete FAQ? Read the main GrowthCalc page.