Saving toward a percentage of the purchase price is useful, but it can create a false finish line. Buyers also need cash for transaction costs and the first months of ownership.
Closing has its own bill
Lender charges, title services, prepaid taxes, and insurance can require cash beyond the down payment.
The house may need money immediately
Moving, utility deposits, tools, and repairs often arrive before savings has time to recover.
Preserve a reserve
Using every dollar at closing can turn a minor repair into new high-interest debt.
Sources
- Consumer Financial Protection Bureau, Your Home Loan Toolkit.