Key takeaway
The basic math is one division: months to save = down-payment target ÷ monthly saving. On a $400,000 home that is $12,000 for 3% down, $40,000 for 10%, and $80,000 for 20%. At $1,000 a month with no yield and no price growth, those take 12, 40, and 80 months. Two forces then bend the timeline: a yield on your savings shortens it (about 71 months to $80,000 at a 4% yield), and home-price growth lengthens it by moving the target — at 3% annual growth the 20% target is about $92,742 after five years, not $80,000.
Run your own numbers: Rent vs Buy Calculator — compare the full unrecoverable costs of owning against renting on your numbers.
The formula: target ÷ monthly saving
Your target is the home price multiplied by the down-payment percentage you choose:
Target = price × down-payment % · Months = target ÷ monthly saving
If your savings earn a yield, each month's balance grows before the next deposit lands, so you get there sooner than the simple division says. If home prices rise while you save, the target itself grows — your percentage is of the price on the day you buy, not the price on the day you started. The sections below show both effects with the numbers worked out, not rounded vibes.
The baseline table: no growth, no yield
Start with the simplest case — savings earn nothing, prices do not move. Months to reach each target at $1,000 a month:
| Home price | 3% down | 10% down | 20% down |
|---|---|---|---|
| $300,000 | $9,000 — 9 months | $30,000 — 30 months | $60,000 — 60 months (5.0 years) |
| $400,000 | $12,000 — 12 months | $40,000 — 40 months | $80,000 — 80 months (6.7 years) |
| $500,000 | $15,000 — 15 months | $50,000 — 50 months | $100,000 — 100 months (8.3 years) |
Halve the monthly saving to $500 and every timeline doubles; raise it to $1,500 and each timeline is the target divided by $1,500 — for the $400,000 / 20% case, about 53 months (4.4 years) instead of 80. The monthly amount is the lever you control; the price and the percentage set the size of the job.
What a savings yield does: the $80,000 example
| Monthly saving | No yield | At a 4% yield |
|---|---|---|
| $500 | 160 months (13.3 years) | About 129 months (10.7 years) |
| $1,000 | 80 months (6.7 years) | About 71 months (5.9 years) |
| $1,500 | About 53 months (4.4 years) | About 49 months (4.1 years) |
The yield helps most on the longest timelines, because interest compounds on a larger balance for longer. It does not rescue an undersized monthly amount — at $500 a month you are still saving for over a decade either way — but on a five-to-seven-year plan it is worth real months. (For what a high yield actually pays versus a standard account, see high-yield savings accounts explained.)
The moving target: prices grow while you save
Now let the price move. At 3% annual growth, a $400,000 home costs about $463,710 after five years — so 20% down is about $92,742, not $80,000. You are not saving toward a fixed number; you are chasing a percentage of a rising price.
Modeled month by month — you save $1,000 a month at a 4% yield while the price grows 3% a year — you reach 20% down in about month 86, when the target has grown to about $98,876. Compare the three versions of the same plan: 80 months if nothing grows, about 71 months if only your savings grow, and about 86 months when the price grows too. At $1,500 a month under the same growth assumptions, you arrive in about month 56, against a target of about $91,833.
The lesson is not "buy immediately" — it is that a long, slow save toward 20% can be partially self-defeating in a rising market, which is exactly why the percentage choice below is a real decision and not a formality. Whether buying sooner beats waiting is the rent vs buy question, and it depends on how long you will stay.
3% vs 10% vs 20% down: the trade-offs, stated plainly
| 3% down | 10% down | 20% down | |
|---|---|---|---|
| On a $400,000 home | $12,000 | $40,000 | $80,000 |
| Loan amount | $388,000 | $360,000 | $320,000 |
| Time at $1,000/month (baseline) | 12 months | 40 months | 80 months |
| PMI on a conventional loan | Yes — required under 20% down | Yes — $150/month on this example at 0.5%/year, until 80% LTV | No PMI |
3% down gets you in fastest and keeps more of your cash as a reserve, at the cost of the largest loan, the largest payment, and PMI. 10% down halves the wait versus 20% and shrinks the loan, but PMI still applies — on the $400,000 example it costs $150 a month until you can request it off at 80% LTV (see how much PMI costs and when it drops off). 20% down avoids PMI entirely and gives the smallest payment, but takes the longest to save and carries the most moving-target risk while you wait. None of the three is "the right one" in the abstract — the right one is the one whose timeline, payment, and reserve position all survive your actual budget. Check the payment side with how much house a salary actually supports and the debt-to-income ratio lenders will apply.
One more line in the budget: the down payment is not the full cash-to-close. Closing costs (often planned at roughly 2–5% of the price), moving costs, and a cash reserve you do not spend at closing all sit on top of it. A plan that reaches 20% down with zero left over has hit the number and missed the point.
Bottom line
Pick the percentage by doing all three calculations, not by repeating "20% or wait" as a rule: (1) the baseline months — target ÷ monthly saving; (2) the yield adjustment — a 4% yield cuts the $80,000 timeline from 80 to about 71 months at $1,000 a month; and (3) the moving-target adjustment — at 3% price growth the same plan lands around month 86 against a target near $98,876. Then test the result against how long you will stay and what you can actually afford each month. A smaller down payment bought years sooner can be the better trade; so can waiting. The math above is how you tell which one you are looking at.
Run your own numbers
Our free Rent vs Buy Calculator compares buying at your timeline against continuing to rent, and the Mortgage Payoff Calculator shows what the loan you are saving toward will actually cost.
Related research
- How much is PMI? — $150/month on a $400K home with 10% down, and the 80% / 78% LTV drop-off lines.
- Rent vs buy: the real math — the 5% rule, unrecoverable costs, and the time horizon that decides whether buying sooner wins.
- How much house on a $100K salary? — the 28/36 rule worked out: what the payment side of your target can support.
- Debt-to-income ratio explained — front-end vs back-end DTI and the lender limits your down payment feeds into.
- High-yield savings accounts — what APY really means for the account your down payment sits in while it grows.
Related calculators
- Rent vs Buy — find your breakeven year at the price and down payment you are saving toward.
- Mortgage Payoff — what extra payments do to the loan on the other side of the down payment.
- Home Equity — how equity and loan-to-value build once you own, including the 80% PMI line.
- Compound Growth — the same compounding that grows your down-payment savings, modeled year by year.
Frequently asked questions
How long does it take to save a 20% down payment on a $400,000 home?
20% of $400,000 is $80,000. With no interest on your savings and no home-price growth, that takes 160 months at $500 a month (13.3 years), 80 months at $1,000 a month (6.7 years), or about 53 months at $1,500 a month (4.4 years). Earning 4% on your savings shortens those timelines to about 129, 71, and 49 months.
How does home-price growth change how long I need to save?
Your target is a percentage of the price when you buy, not today's price. At 3% annual growth, a $400,000 home costs about $463,710 after five years, so 20% down rises from $80,000 to about $92,742. Modeled monthly — saving $1,000 a month at a 4% savings yield while the price grows 3% a year — you reach 20% down in about month 86, when the target is about $98,876.
Is 3%, 10%, or 20% down better?
Each is a different trade. On a $400,000 home: 3% down is $12,000 and gets you in fastest, but the loan is largest and conventional loans under 20% down carry PMI. 10% down is $40,000 — on this example PMI at 0.5% a year costs $150 a month until you can request it off at 80% LTV. 20% down is $80,000, avoids PMI entirely, and gives the smallest loan and payment, but takes the longest to save and is the most exposed to prices rising while you wait.
How much do I need beyond the down payment?
The down payment is not the full cash-to-close. Budget separately for closing costs — often planned at roughly 2–5% of the purchase price — plus moving costs and a cash reserve you do not spend at closing. A timeline that hits 20% down but leaves you with no reserve has hit the number and missed the point.
Does earning interest on my down-payment savings matter?
Yes, over multi-year timelines. Saving $1,000 a month toward $80,000 takes 80 months with no yield and about 71 months at a 4% yield — roughly nine months sooner — because interest compounds on a growing balance. The yield does not rescue an undersized monthly saving amount, but on a five-to-seven-year timeline it is worth real time.
Last updated: October 25, 2026