Buyer Tips · Raleigh Metro
Where to Keep Your Down Payment Savings For Your Dream Home
Saving for a down payment takes time — where you keep that money while you save matters just as much as how much you save.
For many aspiring buyers, saving enough for a down payment and closing costs is the biggest hurdle to homeownership. It’s not surprising — the national median home price as of the last quarter of 2025 was a record $365,000, according to real estate data provider ATTOM, which means a conventional 20% down payment works out to about $73,000. Even a smaller down payment still means saving thousands of dollars, so it matters where you keep those funds while you save: somewhere accessible, but still earning a competitive rate.
High-Yield Savings Account
Best for buyers who want a competitive interest rate and the flexibility to withdraw their money whenever they need it. A high-yield savings account (HYSA) earns a meaningfully higher APY than a standard savings account — some of the best online banks and credit unions offer rates over 10 times the national average — and you can withdraw penalty-free at any time, though some institutions cap how many withdrawals you can make per month. The tradeoff is that the rate is variable, not fixed, so it can move with Federal Reserve decisions, and most HYSAs are offered by online-only banks rather than a brick-and-mortar branch. If you’re planning to buy within 6 to 12 months, an HYSA is typically the best fit.
Certificate of Deposit
Best for buyers who want to lock in today’s higher rates but are still 12 to 24 months or more away from buying. A certificate of deposit (CD) offers a fixed rate that’s typically higher than a traditional savings account — as of March 2026, the best CDs on the market offer as high as 4.10% APY. The catch is accessibility: your money is tied up for the CD’s term, and withdrawing early usually means paying a penalty that can wipe out months of interest, so a CD isn’t the right choice if you plan to buy soon.
Money Market Account
Best for buyers who want one account for both spending and saving. A money market account (MMA) offers competitive, variable interest in line with an HYSA or short-term CD, while still giving you a debit card, ATM access, and check-writing so you can withdraw funds anytime. The downside is that combining spending and savings in one account can make it easier to dip into money you meant to save.
First-Time Home Buyer Savings Account
Best for first-time buyers who want to save for a down payment while taking advantage of state tax deductions. A first-time homebuyer savings account (FHSA) is offered by certain states and lets you deduct contributions from your state taxable income up to your state’s limit, with interest that may also be tax-free or deferred. The funds can only go toward approved home-buying expenses — a down payment, closing costs, agent fees, appraisals, or inspections — and using them for anything else can trigger taxes and penalties; most programs also cap how much you can contribute annually, and sometimes over your lifetime.
Which Should You Choose?
Your home-buying timeline is what should drive this decision. If you’re buying soon, accessibility matters more than squeezing out a slightly higher rate — especially with inventory tight and desirable homes moving quickly, particularly heading into spring, which is peak season. If your timeline is still unclear, prioritize flexibility so you’re ready to act when the right property comes along. Whichever account you choose, look for the option with the lowest fees and the highest rate for that account type, and weigh any extra perks that make hitting your savings goal easier.
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