I'm planning on buying a house within the next 5 years. For that timeline, is there a good way to invest my money rather than let it languish in a low-interest bank account? I have been thinking of contributing to my mutual fund account (this is separate from retirement savings, of course) and then cashing this out when I want to buy a house. I have around 3k saved in this account already, and can save an additional $250 or so per month for the next 5 years. Does this make sense? Am I exposing myself to too much risk for my timeline?

For a five year horizon you could use something like:
Domestic stock 35%
Foreign stock 15%
Bonds 40%
Short-term (cash equivalent) 10%

Or more conservatively:
Domestic stock 20%
Foreign stock 0%
Bonds 50%
Short-term (cash equivalent) 30%

I used the former in my wife's and my house down payment fund, right up until the point that we had an offer accepted. Probably overly risky. However for a purchase five years away it is quite reasonable. In that time frame you might change your mind about the specific timing, etc, or any number of other things could happen.

Very interesting suggestion. This reminds me of a target date retirement index fund... I wonder if I could invest in a target date fund for like 2030... something with moderate risk to allow growth but enough stability to maintain most of my principal if the market went south.

Has anyone ever heard of doing something like this in a non-retirement context?