How Much Money Do I Need to Buy a Home?
By Samantha Shelton, Broker Owner & Mortgage Loan Originator at Align Lending (NMLS #2041154) · Updated August 2026
Quick answer
Plan for four buckets: the down payment, estimated closing costs, prepaid escrow items such as taxes and insurance, and a reserve cushion for moving and early repairs. The first three are transaction costs; the fourth is what keeps the first year comfortable. Build all four together rather than solving only for the down payment.
Samantha's Take
Samantha Shelton · Broker Owner & Mortgage Loan Originator · NMLS #1647301
The bucket buyers forget
Almost everyone plans the down payment. Almost nobody plans the reserve. I've watched buyers hit their closing number perfectly and then feel broke for six months because the washer died in week three. I'd rather structure a slightly smaller down payment and keep the cushion.
Why this matters
Cash planning determines flexibility. A buyer with reserves can handle an inspection surprise; a buyer without one may have to walk.
Some cash requirements are property-driven, not buyer-driven, so they change as your search narrows.
Separating the buckets makes the down-payment tradeoff visible instead of accidental.
What changes the answer
- Loan structure
- Different structures carry different minimum down payment and mortgage insurance treatment.
- Closing timing
- Prepaid tax and insurance amounts vary with the closing date and the local billing cycle.
- Seller contributions
- Negotiated credits, when available, can change your cash to close.
- Gift or grant funds
- Documentation requirements differ depending on the source of funds.
Try it with your numbers
Model the cash-versus-payment tradeoff and see what each dollar of down payment changes.
BUILD MY CASH + PAYMENT PLANCommon questions
- Is 20% down required?
- No. Multiple structures allow less, though mortgage insurance may be part of the structure.
- How much reserve should I keep?
- There's no universal number. Plan for moving, immediate repairs and a few months of the new payment.
- Are closing costs negotiable?
- Some items are negotiable between the parties. Others are third-party or government costs.