Down Payment Calculator
Calculate the down payment needed for your home purchase. See how different down payment amounts affect your monthly mortgage.
How to Use the Down Payment Calculator
- Enter home price: Input the purchase price of the home you're considering.
- Adjust down payment: Use the slider to set your down payment percentage (0-50%).
- Set interest rate: Enter current mortgage rates or your expected rate based on credit score.
- Add property costs: Include property tax rate, annual insurance, and HOA fees if applicable.
- Compare scenarios: Try different down payment amounts to see impact on monthly payments and PMI.
Frequently Asked Questions
Do I really need 20% down to buy a home?
No, many loan programs accept down payments as low as 3-3.5%. However, down payments below 20% typically require PMI, increasing monthly costs. VA and USDA loans offer zero-down options for eligible buyers. Choose down payment amounts based on your savings, budget, and long-term goals.
How does PMI work and when can I remove it?
PMI protects lenders when you put less than 20% down. It costs 0.5-1% of the loan amount annually. On conventional loans, you can request removal once you reach 20% equity through payments or appreciation. It automatically cancels at 22% equity. FHA loans have different rules with mortgage insurance that may last the loan's life.
Should I make a larger down payment or keep cash for emergencies?
Maintain adequate emergency funds (3-6 months expenses) before maximizing down payments. Homeownership brings unexpected costs like repairs and maintenance. Balance down payment size with maintaining financial flexibility. Consider that money in down payments can't easily be accessed later.
Can I use gift money for my down payment?
Yes, most loan programs allow down payment gifts from family members. Lenders require gift letters documenting that money doesn't need repayment. Some programs limit how much can come from gifts versus your own funds. Check specific loan program requirements before accepting large gifts.
How much does down payment size affect my monthly payment?
Significantly. Each additional $10,000 down reduces monthly principal and interest by roughly $65-75 (at 7% interest, 30 years). Larger down payments also eliminate PMI, saving another $50-100 monthly per $100,000 borrowed. The combined effect can reduce monthly costs by hundreds of dollars.
Understanding Down Payments and Home Buying
The down payment represents your initial equity investment in a home purchase. This upfront payment reduces the amount you need to borrow, affecting monthly payments, interest costs, and loan terms. Down payment size significantly impacts home buying affordability and long-term financial outcomes. Larger down payments provide immediate benefits but require more upfront savings.
The 20% Down Payment Benchmark
Traditional mortgage lending emphasized 20% down payments as the standard. This threshold eliminates private mortgage insurance requirements, reduces monthly payments, and demonstrates financial stability to lenders. Borrowers with 20% down typically qualify for better interest rates and loan terms. The equity cushion protects lenders from losses if home values decline, making these loans less risky.
However, saving 20% down creates barriers for many buyers, especially first-time purchasers and those in expensive markets. A $400,000 home requires $80,000 down at 20%, taking years to accumulate. Many buyers choose smaller down payments to purchase homes sooner, accepting PMI costs and slightly higher monthly payments in exchange for earlier homeownership and the benefits of building equity.
Private Mortgage Insurance (PMI)
PMI protects lenders when borrowers make down payments below 20%. This insurance typically costs 0.5% to 1% of the loan amount annually, adding $50-$100+ monthly for every $100,000 borrowed. While PMI increases monthly costs, it enables homeownership with smaller down payments. Most conventional loans require PMI for down payments under 20%, though FHA loans use mortgage insurance premiums (MIP) with different rules.
PMI isn't permanent on conventional loans. Once you reach 20% equity through payments or home appreciation, you can request PMI removal. Some loans automatically cancel PMI at 22% equity. This removal can save hundreds monthly, providing motivation to pay down principal or improve your home to increase value. Track your equity carefully and request removal as soon as you qualify.
Common Down Payment Scenarios
3-5% Down (Conventional/FHA)
Minimal down payment for buyers with limited savings. Requires PMI and results in higher monthly payments. Good for first-time buyers who can afford payments but lack substantial savings.
10% Down (Moderate)
Reduces loan amount and monthly payments while still requiring PMI. Shows stronger financial position to sellers. Balances saving time with ongoing costs.
20% Down (Traditional)
Eliminates PMI requirements and often secures better interest rates. Demonstrates financial stability and reduces total loan costs significantly. Standard recommendation for those who can save it.
25%+ Down (Large)
Minimizes borrowing and maximizes equity. Best rates and terms available. Useful for competitive markets or when downsizing from previous home sale. Requires substantial saved capital.
Related Calculators
Mortgage Calculator
Calculate mortgage payments, total interest costs, and amortization schedules. Get accurate estimates for home mortgages with different terms.
Paycheck Calculator
Calculate your take-home pay after federal taxes, state taxes, FICA, and deductions. Free paycheck calculator shows net pay, tax withholdings, and annual income breakdown.
Payment Calculator
Calculate monthly loan payments, maximum loan amounts, or loan terms. Find payment options that fit your budget with this free calculator.