A deposit is usually the largest savings goal a household attempts, and the one most exposed to a moving target: while you save, prices and rates change. Getting the arithmetic explicit early turns an open-ended effort into a dated plan.
This guide sets out what each deposit size costs in time, what else has to be funded alongside it, and how to weigh a bigger deposit against buying sooner.
The Deposit Is Not the Whole Number
Buyers routinely save the deposit and then discover the transaction needs several thousand more. Budget for the complete cash requirement from the start:
- Deposit — 5% to 20% of the purchase price.
- Closing and transaction costs — commonly 2-5% of the price, covering legal fees, searches, surveys, lender charges and taxes.
- Moving and immediate repairs — $2,000 to $6,000 is realistic for most moves.
- An intact emergency fund — draining savings to complete a purchase leaves a new homeowner with a large fixed payment and no buffer, which is the most common early-ownership mistake.
On a $400,000 purchase with a 10% deposit, the honest cash requirement is closer to $56,000 than $40,000 once costs and a reserve are included.
Timeline by Deposit Size
All figures assume a $400,000 target property, zero starting balance and a 4% return in a high-yield savings account.
| Deposit | Amount | At $800/mo | At $1,200/mo | At $2,000/mo |
|---|---|---|---|---|
| 5% | $20,000 | 24 months | 16 months | 10 months |
| 10% | $40,000 | 46 months | 31 months | 19 months |
| 15% | $60,000 | 66 months | 45 months | 28 months |
| 20% | $80,000 | 85 months | 59 months | 36 months |
The step from 10% to 20% at $1,200 a month costs an extra 28 months — well over two years of additional renting and market exposure. That is the real trade-off, and it should be compared against what the larger deposit saves rather than assumed to be correct.
Run your own price, deposit percentage and monthly amount through the savings goal calculator to get a dated target.
Bigger Deposit or Buy Sooner
A larger deposit buys three things: a smaller loan, usually a better interest rate, and in many markets the removal of mortgage insurance once you cross a threshold such as 20%.
On our $400,000 example at 6.5% over 30 years, a 10% deposit means a $360,000 loan costing about $2,275 a month, while a 20% deposit means a $320,000 loan at roughly $2,022 — a difference of $253 a month, plus whatever mortgage insurance the smaller deposit attracts. Over 30 years the payment difference alone totals more than $91,000.
Against that, buying 28 months earlier means 28 fewer months of rent, and in a rising market it means locking in a price. Neither side is automatically right; the comparison depends on your rent, local price movement and whether the smaller deposit triggers insurance premiums.
A workable compromise
Many buyers target the insurance threshold rather than a round number — the smallest deposit that avoids the premium — and then direct what would have been further deposit savings into extra principal payments after completion. That captures most of the cost benefit without extending the wait. You can size that ongoing extra payment with the mortgage payoff calculator.
Finally, re-run the numbers every six months while saving. Prices, rates and your income all move, and a plan built on figures from two years ago will quietly be aiming at the wrong target.
Costs Beyond the Deposit
A savings timeline built around the deposit alone routinely falls short at the last moment, because the deposit is only part of what completion requires. Budget for the full amount from the start.
Transaction costs. Legal fees, surveys, searches, lender fees and any transfer or stamp duty commonly add 2% to 5% of the purchase price. On a $350,000 home that is $7,000 to $17,500 needed in cash on top of the deposit.
Moving and immediate essentials. Removals, basic furniture, white goods and any urgent repair identified by the survey typically run several thousand more. These are unavoidable and arrive within weeks of completion.
An intact emergency fund. Emptying your buffer into a deposit means the first boiler failure goes on a credit card. Treat three months of essential expenses as untouchable and exclude it from the deposit total entirely.
Adding these together usually raises the real target by 15% to 25% above the headline deposit. Recalculating the monthly amount against that fuller figure early is far less painful than discovering the gap two weeks before exchange, and it keeps the timeline you are working to an honest one.