It’s been a few years since you bought your last home and things have changed. The economy looks different, mortgages look different, and financial institutions look different. The move to digital and instability in the market due to coronavirus concerns is leaving a lot of people wondering: Where should they keep their money when saving for a down payment to buy a new house?

Buying a house is expensive. Luckily, you’ve already built equity in your current home that you can apply to your next purchase to reduce your mortgage loan. But that doesn’t mean you’re financially in the clear. Saving to make your next purchase is essential to securing your financing and making sure you’re comfortable in your new home.

The majority of people opt for 5% of the purchase price as a down payment on their new home.

So where do you put that money while you’re waiting to make a purchase? Here are some great options for you to consider to keep your funds secure and your interest growing while you search for the perfect new place to call home:

Savings Account

A savings account makes it easy for you to access your money. They are safe, reliable, and are FDIC insured up to $250,000. Savings accounts pay low interest compared to some of the other options, but their rate is stable and not influenced by the market. Online banks typically pay higher interest than traditional banks, however, it is a bit harder to access your savings when it’s time to buy. There are many banks to consider.

Certificates of Deposit

There are two types of certificates of deposit (CDs) for you to consider: short-term CDs and no-penalty CDs. As the name suggests, a no-penalty CD doesn’t charge you a penalty for withdrawing your funds before the maturity date whereas a short-term CD locks your money into your investment for a period of 3-24 months. No penalty CDs typically pay less interest, but if you’re planning to buy sooner rather than later and the perfect home comes on the market, you don’t risk taking a financial hit to access your money.

Brokerage Account

If you like to gamble, this option might be for you. While typically returns are relatively stable when playing with the stock market, in the current climate, this option is not for the faint of heart. There is massive opportunity for growth by investing your savings in the stock market, which can pay significantly higher than any of the other options, but you run the risk of losing it all if the wrong investment is made. It is best to work with a professional broker on this option.


This is a retirement savings account which can be used to safely store your down payment while you’re looking to buy a home. A 401(k) investment is best if you plan to buy a home in the next few years, as they have a maximum annual contribution. That means you can only put in up to a certain amount every year, so over time it becomes a nice nest egg. Be aware of the possible withdrawal penalties for taking money from your 401(k) before retirement age before making the decision to invest here.

There are many options for you to consider while tucking your money away for the down payment on your next home. The best option for your situation comes down to your risk tolerance and the timeframe you are working with to buy your next home. Speak to a qualified mortgage lender or your financial planner about your options before deciding where to keep your down payment savings.

When the time comes to buy, work alongside your lender and your REALTOR® to make sure you find the perfect home and are ready to go when the time comes to place an offer.

Still haven’t found the perfect home? Check out these great properties!

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