Money Guy Show – “Best and Worst States for Saving a Down Payment on a Home”

Hosts: Brian Preston & Bo Hanson
Date: January 7, 2026

Episode Overview

This episode dissects the challenges and realities of saving for a home down payment across the United States. Brian and Bo dig into new data from Consumer Affairs that ranks each state by the time it takes for a typical household to save a 10% down payment on a median-priced home. The discussion then pivots to why these headline-grabbing stats are often more discouraging than helpful—and how “The Money Guy” methodology can help shortcut this timeline, even in pricier states. The hosts also share actionable guidance to make homeownership more attainable, plus they answer listener questions about net worth statements, Roth strategies, mortgages, and saving rates.

Key Discussion Points & Insights

1. The “Shock and Awe” of Saving for a Home in 2026

Consumer Affairs’ Research:

• Ranks all 50 states by years needed to save 10% down on a median home, using statewide income, taxes, and living expense data.
• Fastest States:
  • #3 Texas: 10 years, 3 months
  • #2 Ohio: 9 years, 11 months
  • #1 Iowa: 8 years, 9 months
• Slowest States:
  • #48 New York: 23 years, 2 months
  • #49 Montana: 24 years, 5 months
  • #50 California: 25 years, 2 months

“If I was a young person, I’d be super discouraged… But we want to tell you, there’s a better way to do money.”
— Brian (02:51)

2. Unpacking the Methodology

• Consumer Affairs’ Approach:

  • Start with statewide median income.
  • Subtract typical taxes and average living expenses.
  • Assume households can save only 10% of remaining discretionary income toward their down payment.

• Example—California:

  • Median income: ~$100,000
  • After taxes & essential costs: ~$33,000 “discretionary”
  • 10% savings rate: $3,300/year
  • Median home: $832,000 → $83,200 (10%) down payment
  • Result: Takes over 25 years

“This is what Consumer Affairs said… all that you would be able to save is 10% [of discretionary].”
— Bo (06:34)

3. The Money Guy “3, 5, 25” Rule – A Better Way

• Guidelines for Buying Your First Home:
  1. 3% Down Payment: Acceptable for first home—most people can’t do 20% upfront.
  2. 5-7 Years Residency: Minimum time in home to weather transaction costs and market effects.
  3. 25% Rule: Mortgage, taxes, insurance should be no more than 25% of gross income (adjust if you don’t have car payments/public transport).

“If I didn’t put down 20% on my first home, why should you?… So we’re very realistic with this 3% down payment.”
— Brian (08:26)

• Recalculating the Timeline:

  • California example, 3% down:

    • $25,000 target (vs. $83,200 for 10%)
    • With the same $3,300/year discretionary savings, it takes about 7.5 years—down from 25 years.

  • Iowa example, 3% down:

    • $7,400 target, $2,800/year savings
    • About 2 years, 7 months

“Now… in order to save for a home in California, it would only take you 7 years and 6 months. That’s a far cry from the 25 years.”
— Bo (10:46)

4. Key Takeaways & Encouragement

• Location Matters: Lower-cost areas = lower barriers to home ownership.
• You Don’t Have to Be Average: Most people can save faster than the “average” stats if highly motivated and strategic.
• Stay Positive: Don’t be paralyzed by doom-and-gloom headlines; focus on what you can control.

“I don’t want you to be average on the way you look at your finances either. I want you to be a financial mutant and do things in a better way.”
— Brian (13:38)

Notable Quotes & Timestamps

• Homeownership feels out of reach?
  “Now, I want you… Even in their methodology… there is a threefold difference. But even Iowa at eight years, nine months… that doesn’t get me jazzed up whatsoever.” — Brian (04:34)

• How do you REALLY save for your goals?
  “When you want to buy your first home, set down roots, people go pretty hog wild with it. They, they kind of go ham…” — Brian (06:51)

• Why only 3% down is okay (for the first house):
  “We have a no hypocrisy policy… rules are for everybody, not just for you know, rules for thee, not for me. I don’t like that stuff.” — Brian (08:26)

• You have more power than average:
  “You don’t have to be average… I want you to be a financial mutant and do things in a better way.” — Brian (13:38)

Interactive Q&A Highlights

[20:15] – Net Worth Statements & Real Estate (Jimman444)

• Q: Should you mark rental property to market in your net worth calculation?
• Advice: For rentals, yes, marking to market is fine—if you plan to eventually liquidate. For your primary home, stay conservative and use cost + improvements.

[26:52] – Roth Strategies (Liam C.)

• Q: If Roth is so good, why not go straight for backdoor/mega-backdoor Roth conversions?
• Advice: Roth is great but be mindful of high tax rates in peak earning years. Sometimes pre-tax contributions + strategic Roth conversions later (when tax rate is lower) are optimal.

“Do I want to, while I’m in my peak earning years, pay 50 cents on every dollar…? I would say no.” — Brian (28:49)

[36:11] – When to Reduce Retirement Contributions (Keith S.)

• Q: Saving 25%, $500k retirement at age 36, $1M net worth… can I back down savings?
• Advice: Calculate your “number” and use a spreadsheet or planning tool (see MoneyGuy “Know Your Number” resource). Consider getting expert help before coasting—don’t back off prematurely.

[41:43] – Paying Off a Second Mortgage at 8.25% (Kenneth)

• Q: Should I pay this off early, or keep maxing retirement?
• Advice: 8.25% is generally high-interest—research your full picture, but “that would bother me if I had 8.25% sitting out.”

[45:33] – College 529 Fund Asset Allocation (Carson, High School Senior)

• Q: When should I move assets conservative?
• Advice: Start soon—cash out at least enough for the upcoming year (or two). Don’t play “timing” games with college money.

“It would be really sad if we had a 2008-type market… and all of a sudden you had 40–50% of your education funded.” — Brian (48:16)

[53:58] – Refinance Closing Costs – Cash vs. Rolling In (Hoke4)

• Q: Should we pay in cash or roll into the new loan?
• Advice: It’s a math equation. In “Step 8” of their process, with plenty of reserves and strong savings, paying cash is wise—otherwise, consider rolling in.

Resources & Tools Mentioned

• Home Buying Calculator – moneyguy.com/resources
• Home Buying Checklist – moneyguy.com/resources
• Know Your Number Course – Tool & spreadsheet to determine your “coast FIRE” stats
• Financial Order of Operations (“Foo”, FOO) – Framework for your financial priorities

Community & Money Guy Show Milestones

• 20-year Anniversary: Started in 2006 as a passion project, now a national platform.
• New “Money Guy Questionnaire”: Listeners invited to directly shape future content.
• Engagement with listeners: Q&A, polls, merchandise giveaways.

Memorable Moments & Tone

• Light-hearted banter: Brian jokes about being a “financial mutant” and pokes fun at the tech setup and caloric habits (“I must be hungry…” 06:51).
• Celebration of audience progress:
  “76% have done their net worth statement. That’s unbelievable. That’s a clap!” (22:26)
• Behind-the-scenes: “We’re just two knuckleheads… It’s our 20 year anniversary today” (17:37)

Final Encouragement

“Don’t let somebody just rain on your parade and tell you how bad everything is, because for all the bad, there is still a lot of positives… You don’t have to be average. You can be a financial mutant.”
— Brian (13:24, 13:38)

For More & Next Steps

• Visit moneyguy.com/resources for all tools discussed.
• Fill out the Money Guy Questionnaire to shape the show.
• Remember: Homeownership is tough, but headlines exaggerate. Smart strategies and thoughtful math can get you there—often in far less time than the headlines claim.

Money Guy Team Out!