Saving for a Down Payment: Why it’s Best to Start Young

By Andrew


handing keys to a coupe


If you’re a young adult, there’s probably a lot on your mind. Whether you’re transitioning from college to the workforce, moving to a new city, signing your first lease, or all of the above, there’s no denying that you are in the midst of a chaotic season. And with so much else on your plate in your early adult years, buying a home might be the last thing on your mind.

Nevertheless, your future home will likely be the most expensive purchase you ever make, so it’s a good idea to start saving sooner rather than later. A recent study on what you need to save for a down payment found that beginning to save for your first home at age 22, rather than in your mid or late twenties, can make the savings process far less financially daunting.

Here are some of the benefits to saving earlier, rather than later.

Age 22

If you’re a 22 year-old aiming to save enough for down payment by age 30, you should plan to set aside between $287 and $2,458 each month, depending on where you live.

If you live in Rochester, New York, for instance, and saved $287 per month, you could have enough for a down payment in just 8 years. However, if you live somewhere like Los Angeles or San Diego, you would need to set aside upwards of $1200 a month to have enough for a down payment by age 30.

Though these numbers might seem daunting to most 22 year-olds, it’s important to remember that the longer you wait, the more intense the saving process becomes.


Age 25

Let’s say you begin saving a few years later, when you’re 25 years-old. At this point, you could  have to save twice as much each month as a 22 year-old in order to have enough for a down payment by age 30.

Depending on where you live, you should plan to set aside between $450 and $4,000 each month to meet your savings goal. If you live in Cleveland, Ohio, this means saving about $468 each month. However, If you live in San Antonio, Texas, you’ll need to save much more– around $724/month, to be exact. And if you live in San Francisco, you’ll need to save a whopping $3,000 each month to have enough for a down payment by age 30.

Needless to say, if you start saving at age 25, you might regret not having started earlier.


Age 29

As you might imagine, beginning to save for a down payment 1 year before you plan to purchase a home, isn’t the best idea.

Better late than never though, right? Just keep in mind that you’ll really have to kick the savings up a notch if you go this route. If you begin saving for your down payment at age 29, you’ll need to set aside between $2,295 and nearly $20,000 each month, depending on where you live. If you’re from Cleveland, Ohio or Rochester, New York, you’re on the lower end of that spectrum, and should plan to save around $2,300/month. If you’re from somewhere like San Francisco or San Jose, though, you might need to delay the house hunting– unless you can afford to funnel $15,000 into your savings account each month.


In summary, the longer you wait to save for your down payment, the more financially burdensome the savings process will be. So, if you’re looking to purchase a home by age 30, why not start now?


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About Andrew

Andrew is a corporate finance consultant living in Los Angeles, specializing in distressed and bankrupt consulting. He helps clients review business plans and the general market and decide what steps to take next. He has a masters in finance. Andrew enjoys running and biking in the San Gabriel mountains, cheering for the San Francisco Giants and eating (but trying not to gain weight).

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