We did the math to calculate how much money you need to save monthly to buy a home by 35

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iowa housesMax Maximov MM/Shutterstock

  • Saving up to buy your first home can be daunting, but it's not impossible.
  • We calculated how much money aspiring homeowners need to save a month to buy a home by the time they're 35, depending on what age they begin saving.
  • We ran these calculations for eight different housing price points at two different down payment rates, 10% and 20%.
  • We assumed the money is put in a high-yield savings account with a 1.6% annual interest rate.

Saving up for a down payment to buy a house may seem daunting - compared to baby boomers who bought their first home in the 1980s, millennials buying their first home today will pay 39% more, according to Student Loan Hero.

But higher home prices doesn't mean buying your first house is impossible.

We calculated how much you would need to save monthly to have enough for a down payment on a home by age 35, depending on what age you begin saving.

We looked at eight different price points, from $250,000 to $1,500,000, and two different down payment rates, 10% and 20%.

Ultimately, your target home price - and which down payment you opt for - will come down to a variety of factors, like location, income, and other recurring monthly expenses.

Calculating monthly savings to buy a house

Assuming aspiring homeowners would need a few years post-college to get settled and make a dent in their student loans before they start saving for a house, we began our calculations at age 25.

A high-yield savings account is one of the best places to save for a down payment because it offers a higher interest rate than a traditional savings account. We chose a conservative 1.6% annual percentage yield (APY) for our calculation, but Ally Bank currently offers a 1.9% interest rate on high-yield savings and Barclays offers a 2.05% interest rate.

10 percent down payment homeOlivia Reaney/Andy Kiersz/Business Insider

To figure out how much you should be socking away every month for a down payment, first find your target home price at the top of the graphic - the down payment amount is listed below in parentheses.

Then, find your current age - or the age you think you'll start saving for a down payment - in the lefthand column. Where the two categories meet is the amount you should be saving monthly to afford the down payment by the time you're 35.

If you start saving early, at age 25, having enough money for a 10% down payment ten years later is relatively achievable; you only need to put $192 away every month if you're aiming for a $250,000 house with a $25,000 down payment - not a far target price from the $275,000 median price of homes currently listed in the US, according to Zillow.

But if you don't start saving until age 30, the monthly savings amount to buy a $250,000 house bumps up to $400.

Now, in order to have enough saved for a 20% down payment - the typical down payment for a house - by age 35, simply double your monthly savings.

Below, you'll see how much you need to save monthly for a 20% down payment.

20% down payment homeOlivia Reaney/Andy Kiersz/Business Insider

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