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Down Payment Calculator: Can You Afford Not To Start Saving for a House?

How long would it take you to save for a down payment? Movoto crunched the numbers across the states--learn how long with our down payment calculator.

David Cross

Content Editor

237 articles, 24 comments

Down Payment Calculator
Click here to try the interactive map.

How long does it take to save for a home? The answer, as it is for most things, is: It’s complicated.

The time it takes to save for a home depends on where you live, how much you earn, and the cost of the home you want to purchase. To coincide with the seasonal upswing in the housing market, Movoto Real Estate calculated how long it would take for the typical home buyer in each state to save for a down payment toward a home.

To come up with our calculation, we accessed data from the United States Census Bureau to determine the median income and the median home value in each state. We then assumed that future home buyers set aside either 5 or 10 percent of their annual income. In addition, we assumed home buyers were saving for either a 3 or 20 percent down payment—the two most common types of down payments.

Unsurprisingly, the time it takes to save for a home differs greatly between states. For example, it would take 15.78 years to purchase a home in Hawaii, the longest time on our list. Conversely, it would take just 4.78 years to save for a home in North Dakota, the shortest time on our list. (In both cases, we assumed a 20 percent down payment and a 10 percent savings rate.)

To help explain our study, we decided to examine various down payment scenarios, using California as an example. If you’re interested, you can read through the details below. Or, if you’d like to find information on your own state, simply input your own relevant information such as the amount you want to save and annual income into our down payment calculator.

How Long Does It Take to Buy a Home in California?

In the Golden State, it would take 13.68 years for a typical Californian to save for a 20 percent down payment on a home, assuming a 10 percent savings rate. This means a Californian looking to purchase a median-valued home will need to save $84,320, roughly $23,000 more than the state’s median income.

According to the U.S. Census Bureau, California has one of the highest median incomes in the country. The typical Californian brings home $61,632 annually. If our imaginary Californian is able to save 10 percent, or $6,163, each year, he or she would be able to purchase a median-priced home worth $421,600, the third largest value behind Hawaii and the District of Columbia.

Nonetheless, saving 10 percent of a paycheck can be daunting. If our imaginary Californian opts to save only 5 percent of his or her income, it could take 27.36 years to afford a 20 percent down payment. This means a Golden State resident saving just $3,082 annually would need just over 27 years to secure a home.

Some residents, however, can shorten the amount of time they spend pinching pennies for their dream home. While a 20 percent down payment is common, some qualified home buyers have the option of a 3 percent down payment, resulting in a shorter wait time. We stress, however, that not all home buyers can receive such a small rate. It’s best to speak with a real estate agent to learn if you qualify.

Buying a Home with a 3 Percent Down Payment

Select Californians who quality for a 3 percent down payment and save 10 percent of their hard-earned paychecks can purchase a median-priced home in just over two years. Less thrifty Californians who save only 5 percent of their paycheck would need four years to save for a new home.

Money in the Bank

As we mentioned earlier, saving money for a home can be complicated. The amount and time needed vary greatly. Still, one thing doesn’t change. Whether you live in California or North Dakota, it’s a time-intensive process, and the first stop is setting a savings goal. Remember, saving even 5 percent of your paycheck will add up over time.

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posted on: January 15, 2013
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