How to Save Money for a House (2027 Action Plan)

To save money for a house, set a dollar target first: the down payment for your loan type plus 2% to 5% of the price for closing costs, then automate deposits into an insured account and shrink the target with Virginia Housing grants and seller credits. On a $331,000 home, the September 2026 median sale price in Norfolk, the down payment is $0 with VA, $3,310 out of pocket with a Virginia Housing DPA Grant, $11,585 at FHA's 3.5% or $16,550 at 5% conventional. This 2027 plan uses VaHome's September 2026 medians and rates checked October 29, 2026.

Down payment you bring	Loan Path ($331,000 home)	Months to save at $750 / $1,500 a month
$0	VA loan (eligible borrowers)	None for the down payment; save for closing costs and a cushion
$3,310	FHA or conventional bond loan + Virginia Housing DPA Grant	5 / 3
$9,930	Conventional 3% down	14 / 7
$11,585	FHA 3.5% down	16 / 8
$16,550	Conventional 5% down	23 / 12
$66,200	Conventional 20% down	89 / 45

Down payment only, before interest earned. Add closing costs ($6,620 to $16,550 at 2% to 5%) unless seller credits or a grant cover them.

Step 1: Know exactly how much you need

Here is the down payment at each city's September 2026 median sale price. Medians cover all closed residential sales, so a condo or a larger single-family home can land well above or below them.

Prices: VaHome analysis of REIN MLS data, September 2026 (see each city's monthly market report). VA loans need no down payment when the price does not exceed the appraised value.

• Closing costs: 2% to 5% of the price ($6,620 to $16,550 on $331,000). Your Loan Estimate shows the real figure, and seller credits can cover some or all of it.
• Earnest money: often 1% to 2% of the price in Hampton Roads, though no rule sets it. It is credited at closing, but you need it when your offer is accepted. See how earnest money works.
• Inspection and appraisal: usually a few hundred dollars each, often paid before closing.
• Cushion: some loans require reserves after closing, set by your lender. Keep an emergency fund for first-year repairs either way.

Step 2: Automate the savings

Open a separate "Home Fund" savings account and schedule an automatic transfer every payday. The FDIC's national averages as of October 19, 2026 were 0.38% for savings, 0.63% for money market and 1.76% for a 12-month CD. Compare your offered APY against them, confirm FDIC or NCUA insurance, and keep money you need within a year or two out of stocks.

Virginia adds a tax break most buyers miss: a first-time home buyer savings account designated at a Virginia financial institution. Its interest and gains come off your Virginia taxable income (contributions are not deductible), up to $50,000 of principal and $150,000 in total. The money may only pay the down payment or closing costs on a single-family home for someone who has never owned one; any other use recaptures the tax break.

Keep the paper trail clean. Lenders typically review your last two months of statements, and Fannie Mae requires you to document any single deposit over 50% of your monthly qualifying income. Move money by transfer, not cash.

Step 3: Cut expenses that don't add joy

• Cancel subscriptions you did not use last month.
• Cook more meals at home and pack lunches.
• Pause big discretionary travel while you save.
• Hold off on a car upgrade: a new payment slows saving, raises your debt-to-income ratio and can derail an approval right before closing.
• Pay down high-interest card balances to free cash flow and help your score; see how to build credit before you buy.

Step 4: Increase income

For most buyers, extra income moves the needle faster than cutting expenses: a raise, overtime or a side job, sent straight to the home fund. Lenders usually want a track record before they count side income toward qualifying, so treat a new gig as savings fuel. If you receive BAH, see how much house your BAH can support.

Step 5: Use down payment assistance

Virginia Housing offers three options through approved lenders, and you choose one per purchase:

• DPA Grant: 2.5% of the price with an FHA bond loan or 2% with a conventional bond loan, for the down payment only and never repaid. You put in at least 1% (a gift counts): on $331,000, an $8,275 (FHA) or $6,620 (conventional) grant plus $3,310 from you.
• Closing Cost Assistance Grant: up to 2% for closing costs or the VA funding fee, with a VA or USDA bond loan only.
• Plus Second Mortgage: a repaid 30-year fixed second loan covering the FHA or conventional down payment, plus 1.5% toward closing costs at a 680+ score. Repeat buyers qualify.

The grants require a first-time buyer (no owned-and-occupied primary residence in 3 years, unless you buy in an Area of Economic Opportunity), free homebuyer education, household income up to $97,000 (one or two people) or $113,000 (three or more) and a price up to $575,000, as of the limits effective August 1, 2026. The Mortgage Credit Certificate in earlier versions of this guide is suspended.

Chesapeake, Portsmouth, Norfolk, Suffolk and the York County, Poquoson and Williamsburg area add HOME-funded programs of $14,500 to $40,000 (apply before you sign a contract). The state's VIDA matched savings program currently adds $10 for every $1 you save, up to $10,000, over 4 to 24 months, with income and net worth limits. Details and the order to apply in are in our Virginia down payment assistance guide.

Step 6: Ask for seller concessions

A seller can pay part of your costs through credits written into your offer, within loan limits:

• VA: no limit on credits for closing costs. Other concessions, such as paying the funding fee or a debt, cap at 4% of the home's reasonable value. See our VA loan guide for Hampton Roads.
• FHA: up to 6% of the price toward closing costs, prepaids and discount points, but not your 3.5% minimum investment.
• Conventional (Fannie Mae): 3% with under 10% down, 6% with 10% to under 25% down, 9% with 25% or more.

A credit competes with the other terms in your offer, so have your agent and lender model the trade-off first.

Frequently Asked Questions

How much should I save before buying a house in Virginia?

The down payment for your loan type plus closing costs of 2% to 5% of the price, minus any grant or seller credit, plus an emergency fund. On a $331,000 home that is $0 (VA) to $16,550 (5% conventional) down and $6,620 to $16,550 in closing costs.

Can I use a 401(k) or IRA for a down payment?

From an IRA, up to $10,000 over your lifetime avoids the 10% early-withdrawal penalty for a first home (no ownership interest in a main home in the prior 2 years) if spent within 120 days; a traditional IRA withdrawal is still taxed as income. A 401(k) has no first-home penalty exception, but if your plan allows loans you can usually borrow up to 50% of your vested balance or $10,000, whichever is greater, capped at $50,000, and a loan for your main home may run longer than 5 years.

What is the lowest down payment I can put on a house?

$0 for VA loans and for USDA loans in eligible areas. 3% for eligible conventional borrowers. 3.5% for FHA.

Can my parents help with the down payment?

Yes. The donor signs a gift letter with the amount, a statement that no repayment is expected, and their name, address, phone and relationship to you. Fannie Mae requires no minimum contribution of your own on a one-unit primary residence, and the donor cannot be the seller, builder or an agent in the deal.

What if I have a 401(k) loan when I apply for a mortgage?

Under Fannie Mae's guide (updated August 2026), a lender does not have to count payments on a documented loan secured by your 401(k) in your debt-to-income ratio, but it subtracts the loan from that account if you use it for reserves. Other loan types can differ, so ask your lender.

Sources & further reading

• FDIC: National rates and rate caps (monthly)
• Freddie Mac: Primary Mortgage Market Survey
• Virginia Housing: first-time buyer programs
• Virginia DHCD: VIDA matched savings
• Virginia Tax: First-time home buyer savings account subtraction
• IRS Publication 590-B: IRA distributions (first home exception)
• IRS: Retirement plan loan FAQs
• VA: Funding fee and closing costs
• HUD: FHA Single Family Housing Policy Handbook 4000.1
• Fannie Mae: Interested party contributions
• CFPB: Prepare to buy
• CFPB: Loan Estimate

Figures checked on official agency and lender-guide pages on October 29, 2026. Rates and program terms change, so confirm current details with your lender, tax advisor or program administrator before relying on any figure.