Down Payment Calculator

Calculate how much you need to save for a home down payment. See how different down payment percentages affect your mortgage and monthly savings needed.

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About Down Payment Calculator

What Is a Down Payment?

A down payment is the upfront cash you pay when purchasing a home, representing your initial ownership stake in the property. It is expressed as a percentage of the total purchase price and is paid at closing. The remainder of the purchase price is financed through a mortgage loan from a lender. The size of your down payment directly affects your loan amount, monthly payments, interest costs, and whether you need to pay private mortgage insurance (PMI).

For example, if you are buying a $400,000 home and put down 20% ($80,000), you would need a mortgage of $320,000. That $80,000 down payment reduces the amount you borrow and demonstrates to the lender that you have a significant financial commitment to the property. Lenders view larger down payments favorably because borrowers with more equity are statistically less likely to default on their loans.

The down payment requirement has evolved over time. In the early 20th century, buyers often needed 50% or more down. After the creation of the Federal Housing Administration (FHA) in 1934, lower down payment options became available, making homeownership accessible to more Americans. Today, down payment requirements range from 0% for VA and USDA loans to 20% or more for conventional loans without PMI, with many options in between for different buyer profiles and loan programs.

Common Down Payment Amounts

Standard Down Payment Percentages:

3% Down: The minimum for many conventional loans (Fannie Mae HomeReady, Freddie Mac Home Possible). Ideal for first-time buyers with limited savings. Requires PMI and typically comes with slightly higher interest rates. On a $350,000 home, that is just $10,500 down.
3.5% Down: The minimum for FHA loans, which are popular among first-time buyers and those with lower credit scores. FHA loans require both upfront and annual mortgage insurance premiums (MIP) for the life of the loan in most cases.
5% Down: A common middle-ground option that is slightly more than the minimum but still accessible for many buyers. PMI is required but at a lower rate than 3% down loans. This option shows lenders a stronger financial commitment.
10% Down: Significantly reduces PMI costs compared to lower down payments. Provides a meaningful equity cushion from day one. On a $350,000 home, this is $35,000 down with a $315,000 mortgage.
20% Down: The traditional benchmark that eliminates the need for PMI entirely. Results in the lowest monthly payments and often qualifies for the best interest rates. On a $350,000 home, this means $70,000 down and a $280,000 mortgage.

The right down payment amount depends on your financial situation, local housing market, and long-term goals. While a larger down payment saves money over time through lower monthly payments and less interest, it also means more cash tied up in your home rather than available for other investments or emergencies. Consider the opportunity cost of a larger down payment versus investing that money elsewhere.

PMI and Its Impact on Your Mortgage

Private Mortgage Insurance (PMI) is a type of insurance that protects the lender — not you — if you stop making payments on your mortgage. It is required on conventional loans when your down payment is less than 20% of the home purchase price. PMI adds a significant cost to your monthly housing expense and understanding how it works is essential for making informed down payment decisions.

How PMI Costs Add Up:

Annual cost: 0.3% to 1.5% of original loan amount
$300,000 loan at 0.5% = $1,500/year or $125/month
$300,000 loan at 1.0% = $3,000/year or $250/month
Higher loan-to-value ratios increase PMI rates
Lower credit scores result in higher PMI premiums

Removing PMI:

Request cancellation at 20% equity (80% LTV)
Automatic termination at 22% equity (78% LTV)
Home improvements may increase equity faster
Refinancing can eliminate PMI if home value rises
Extra principal payments accelerate PMI removal

When calculating the true cost of a smaller down payment, always factor in PMI. Over several years, PMI can add up to thousands of dollars. However, paying PMI to buy a home sooner can sometimes make financial sense if home values are appreciating quickly in your market, as the equity gains may outweigh the PMI costs.

Strategies for Saving Your Down Payment

Saving for a down payment is often the biggest hurdle for aspiring homeowners. A structured savings plan with clear goals and timelines makes this challenge more manageable. The key is to start early, automate your savings, and explore all available resources to accelerate your progress toward homeownership.

Budgeting Tactics:

Set up automatic transfers to a dedicated savings account
Use the 50/30/20 rule: allocate needs, wants, savings
Reduce discretionary spending temporarily
Direct windfalls (bonuses, tax refunds) to savings
Track expenses to identify areas to cut back
Consider a temporary side job for extra income

Where to Keep Your Savings:

High-yield savings accounts (4-5% APY currently)
Money market accounts for slightly higher returns
Short-term CDs if your timeline is 1-3 years
Treasury bills for safe, competitive yields
Avoid volatile investments for near-term goals
First-time homebuyer savings accounts (select states)

A realistic savings timeline depends on your target down payment and monthly savings capacity. If you need $40,000 for a 10% down payment and can save $1,000 per month, it will take approximately 40 months — just over three years. Earning interest on your savings can shorten this timeline. Use the calculator above to see exactly how long it will take based on your specific numbers.

Down Payment Assistance Programs

Down payment assistance (DPA) programs exist at the federal, state, and local levels to help homebuyers who may struggle to save enough for a traditional down payment. These programs are particularly beneficial for first-time homebuyers, low-to-moderate income buyers, and those purchasing in targeted areas. Many buyers are unaware that these programs exist or assume they do not qualify, so it is worth researching all available options.

Types of Assistance:

Grants: Free money that does not need to be repaid, often provided by state housing agencies or nonprofits
Forgivable Loans: Second mortgages that are forgiven after you live in the home for a set period, typically 5-10 years
Deferred Loans: No payments required until you sell, refinance, or pay off your first mortgage
Matched Savings: Programs that match your savings dollar-for-dollar up to a certain amount

Eligibility Requirements:

Income limits (often 80-120% of area median income)
First-time homebuyer status (varies by program)
Minimum credit score requirements
Homebuyer education course completion
Property must be a primary residence
Purchase price limits may apply

Contact your state housing finance agency to learn about programs available in your area. Many cities and counties also offer their own assistance programs. Your lender or a HUD-approved housing counselor can help you identify and apply for programs you may qualify for. Some programs can be combined with FHA or conventional loans for maximum benefit.

How Much House Can You Afford?

Your down payment is just one piece of the affordability puzzle. Lenders evaluate your total financial picture to determine how much house you can afford, including your income, debts, credit score, and the down payment amount. Understanding these factors helps you set a realistic home price target and determine the right down payment percentage for your situation.

Key Affordability Ratios:

Front-End Ratio (28% Rule): Your total monthly housing costs (mortgage payment, property taxes, insurance, HOA fees) should not exceed 28% of your gross monthly income. For a household earning $8,000 per month, that means a maximum housing payment of $2,240.
Back-End Ratio (36% Rule): Your total monthly debt payments (housing costs plus car loans, student loans, credit cards, etc.) should not exceed 36% of your gross monthly income. Some loan programs allow up to 43% or even 50% in certain circumstances.
Home Price to Income: A general guideline suggests your home price should be 2.5 to 3 times your annual household income, though this varies significantly by market and interest rates.

Remember that what you can qualify for and what you can comfortably afford may be different numbers. Factor in future expenses like maintenance (typically 1-2% of home value annually), utilities, furnishing, and lifestyle changes. A conservative approach to home buying leaves room for savings, investments, and unexpected expenses, ensuring your home remains a source of security rather than financial stress.

Use the down payment calculator above to experiment with different home prices and down payment percentages. Compare how a 5% down payment versus a 20% down payment affects your mortgage amount, monthly payment, and the time needed to save. This analysis helps you find the right balance between buying sooner with a smaller down payment and waiting to save more for a stronger financial position.

Frequently Asked Questions

How much should I put down on a house?

The ideal down payment depends on your financial situation. While 20% is often cited as the standard because it eliminates PMI, many buyers put down less. FHA loans require as little as 3.5%, and some conventional loans allow 3% down. Consider your savings, monthly budget, and how long you plan to stay in the home when deciding. A larger down payment means lower monthly payments and less interest over the life of the loan.

What is PMI and how does it affect my costs?

Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. PMI typically costs between 0.3% and 1.5% of the original loan amount per year, added to your monthly payment. For a $300,000 loan, that could mean $75 to $375 extra per month. PMI can be removed once you reach 20% equity in your home, and it automatically cancels at 22% equity.

Can I buy a house with no down payment?

Yes, some loan programs offer zero-down-payment options. VA loans, available to eligible veterans and active-duty military, require no down payment. USDA loans also offer zero down payment for homes in eligible rural areas. However, putting no money down means higher monthly payments, more interest over the loan term, and you may need to pay mortgage insurance. Consider the long-term costs before choosing a zero-down option.

Where should I save my down payment money?

For short-term savings (1-3 years), consider high-yield savings accounts, money market accounts, or certificates of deposit (CDs) that offer safety and liquidity. Avoid investing your down payment fund in stocks or volatile assets if you plan to buy soon, as market downturns could delay your purchase. Some states offer first-time homebuyer savings accounts with tax benefits specifically designed for down payment savings.

What are down payment assistance programs?

Down payment assistance (DPA) programs help homebuyers cover their down payment and closing costs. These programs are offered by federal, state, and local governments, as well as nonprofits. They may come as grants (free money), forgivable loans, deferred-payment loans, or low-interest loans. Eligibility often depends on income, location, first-time buyer status, and completion of homebuyer education courses. Check with your state housing finance agency for available programs.

Does a larger down payment get me a better interest rate?

Yes, a larger down payment can help you secure a lower interest rate. Lenders view borrowers with larger down payments as lower risk, since they have more equity in the home from day one. Putting down 20% or more typically qualifies you for the best available rates and eliminates PMI. Even moving from 5% to 10% down can sometimes improve your rate, potentially saving thousands over the life of the loan.

Should I use my emergency fund for a down payment?

Financial experts generally advise against depleting your emergency fund for a down payment. Homeownership comes with unexpected expenses like repairs, maintenance, and appliance replacements. Aim to keep at least 3-6 months of living expenses in reserve after closing. If using your emergency fund is the only way to afford a home, consider waiting until you can save both a down payment and maintain an adequate emergency fund.

Additional Resources

CFPB Homebuying Guide HUD Home Buying Guide Fannie Mae Homebuyer Education

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