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Saving for mortgage down payment

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  • Saving for mortgage down payment

    My wife and I currently rent, however we want to start saving money every month for a mortgage down payment in the event we decide to buy in the future.  We currently max out our 401k, fund a back door roth, and deposit money every month to a taxable account.  Where is the best place to save this extra mortgage down payment money?  Should I set aside money every month in an online savings account making 1.5% interest to avoid market volatility? Or, should I just contribute the extra money toward our taxable account and plan to withdraw a big chunk of cash from it if we decide to buy a home in the future?

  • #2
    What is your timeline? If you plan to buy in the next 5 years (the "short term"), stay liquid (i.e. high-interest savings) rather than investing. Too much risk in the market in the short term due to volatility.
    My passion is protecting clients and others from predatory and ignorant advisors 270-247-6087 for CPA clients (we are Flat Fee for both CPA & Fee-Only Financial Planning)
    Johanna Fox, CPA, CFP is affiliated with Wrenne Financial for financial planning clients


    • #3
      As jfox, asked, what's your timeline?   Any money that you need within 3-4 years should not be in the stock market.  Save using cash-equivalents such as CDs, short term bonds, or high yield savings,   At the most risk, you could use a robo with a VERY low risk profile, or a 30/70 mix like Vanguard's retirement income fund VTNIX.


      • #4

        Hi there, I agree with Johanna. You should also speak to a Lending Officer to discuss down payment options. You may not need as much as you think under the Doctor Loan Program.

        Click to expand...

        That’s a little sales-y...


        can you give some more detail or educational advice for the OP? Eg... what is often a down payment needed for a normal loan? (X%)? Or a physician or professional loan (y%) ? And how might repayment timeframe change? Or interest rate? Or how might such a loan change where the OP might keep the down payment funds? (Eg maybe not a CD, but maybe some other account?)


        • #5

          and not throwing money down the drain with rent.
          Click to expand...



          • #6

            Thanks for this info


            can u advise what is the current interest fixed rate on the loans you mentioned ?