The 401(k) For Home Ownership

Foyer Home Savings is a new savings platform that is trying to help people save for a down payment on a home. If you’re like many young adults, you’re probably wondering how on earth you’ll ever be able to save up enough money, and Foyer helps with that.

Dubbed the ‘401(k) for homeownership’, Foyer Home Savings offers a high-yield savings account for you to park your cash in as you save up for a down payment on your first home. Just like a retirement 401(k), Foyer Home Savings offers savers a match on their savings to encourage them to save more.

This article will dive into what Foyer Home Savings is, how you can use it if you’re a first-time home buyer, and whether or not it’s the right tool for you.

Foyer Home Savings is an app-based high-yield savings account designed to help first-time homebuyers save up to purchase their first home. The First Time Homebuyer Savings Account offers customers a 4.51% APY and a 2% match on deposits up to $10,000 per year.  

The company was founded by Landy Liu in 2022. The idea behind the app is to help homebuyers achieve their dream of owning a home as housing affordability continues to be a crisis for young people. This came from Liu’s own experience trying to purchase a home when rising interest rates kept making it feel like it was impossible to do so.

One feature that sets Foyer Home Savings apart from other savings platforms is that it treats saving for a home like other major financial goals, such as saving for retirement. Foyer offers users a 2% match on deposits up to the first $10,000 each year. Its accounts also come with tax benefits in eligible states.

Foyer also provides educational resources to help first-time homebuyers budget for costs associated with home ownership. This includes other expenses that accompany the down payment – like closing costs – and understanding how a mortgage works.

Foyer Home Savings offers a high-yield savings account with 4.51% APY that’s designed for first-time homebuyers. It also provides a match, which is unheard of in a savings account. Foyer will give you a 2% match on deposits up to $10,000 per year.

It also offers educational resources to help homebuyers develop a budget and plan to navigate the homebuying process.

The First Time Homebuyer Savings Account is Foyer’s flagship account offering. It comes with 4.51% APY and is designed to help customers save up to buy their first home. Foyer provides savers with a 2% match on deposits up to $10,000 per year.

The account comes with some tax benefits in eligible states including opportunities for deductions and tax-free growth, depending on where you’re located. Accounts can be used for a number of expenses related to purchasing a home such as the down payment or a home inspection.

Note: Tax benefits are currently only available in Alabama, Colorado, Iowa, Michigan, Minnesota, Mississippi, Missouri, Montana, Oregon, and Virginia. 

In addition to the ability to save for a down payment much faster than a traditional savings account, First Time Homebuyer Savings Account holders are connected with real estate experts and local agents to help them through the home buying process. This is designed to reduce some of the friction – and unexpected costs – that can come with buying your first home.

Foyer’s accounts are FDIC insured up to $250,000 through Pacific West Bank.

Related: Mortgage Calculator: How Much House Can I Afford?

Unlike many high-yield savings accounts, Foyer accounts come with a $7.99/month service fee for accounts in excess of $5,000. Not only is this rather high compared to traditional banks, but because the idea is to save money for a down payment, it’s likely you’ll have a balance in your account that exceeds $5,000 putting you on the hook to pay the monthly service fee.

The monthly fee also effectively erodes any benefit from their moderately high interest rate. If you have $10,000 saved, you’d earn $451 in interest per year. But that fee would eliminate $95 in interest. The effective interest rate of making $356 after fees drops your effective APY to 3.5%. Still not bad, but you’re almost 2% lower than the best savings account rates out there.

You can compensate for the monthly fee by saving $399.50 per month. In this case, the 2% match would be $7.99. However, if you’re saving almost $400 per month, putting it into a regular high yield savings account might be the better option.

Foyer Home Savings is a high-yield savings platform designed for first-time homebuyers. It can be a good option if you need support buying your first home or are looking to benefit from Foyer’s match.

Its APY is competitive, but it isn’t the highest available. And the monthly fee is a bit depressing compared to other banking options.

There is no minimum deposit required to open an account with Foyer Home Savings. Go to the Foyer Home Savings website and click ‘Get Started’ to set up an account. Provide your email address, phone number, and create a password to log in.

Once you’ve set up your login, you may be required to verify your identity with a government-issued ID. You may also need to connect an external bank account to fund your Foyer Home Savings account.

Related: First Time Home Buying 101

Foyer Home Savings is FDIC-insured through Pacific West Bank. In the event of insolvency, the FDIC will step in and cover your account up to $250,000.

Foyer Home Savings doesn’t provide a customer service number or contact information on their website. The best way to contact them is through a direct message via their app or on one of their social media channels.

The Foyer Home Savings app has a 5-star review on both Apple and the Google Play Store.

We can’t really recommend Foyer Home Savings due to the high monthly fee and, as a result, mid-tier effective interest rate. We believe most people saving for their first downpayment would be better off using a traditional high-yield savings account. You can earn a higher interest rate with no monthly fees.

While Foyer does offer a 2% match up to the first $10,000, that only amounts to $200 per year. You’ll wind up paying about half that in the monthly fee over the course of a year anyways, mitigating some of the benefits you might otherwise receive.

Foyer Home Savings might be worth it for those in a specific situation, especially if you’re struggling to save enough money to purchase your first home. The savings match, possibility of receiving tax benefits, and access to real estate professionals can help streamline the homebuying process. But you don’t necessarily need this account to receive any of those benefits.