Down Payment Calculator

How to Use This Down Payment Calculator

1. Enter the total price of the home you are considering purchasing.

2. Choose your calculation mode: from percentage or from dollar amount.

3. Enter either the down payment percentage (e.g., 20%) or the specific dollar amount you plan to put down.

4. Optionally enter an interest rate to see estimated monthly payments for 15-year and 30-year mortgages.

5. Click "Calculate Down Payment" to see your results, loan amount, and whether PMI will be required.

6. Use the quick pick buttons to instantly see how different down payment percentages affect your loan.

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 reduces the amount you need to borrow and shows lenders you have financial stability and commitment to the purchase. The down payment comes from your own funds, not from borrowed money, and is paid at closing along with other closing costs.

Down payment requirements vary by loan type. Conventional loans typically require 3% to 20% down. FHA loans allow as little as 3.5% for borrowers with credit scores of 580 or higher. VA loans for veterans and USDA loans for rural properties may require no down payment at all. However, putting more money down reduces your loan amount, lowers your monthly payment, and may qualify you for better interest rates.

Why the 20% Down Payment Matters

The 20% down payment is a significant threshold in home buying. When you put down at least 20%, you avoid Private Mortgage Insurance (PMI) on conventional loans. PMI protects the lender if you default on your loan and typically costs 0.5% to 1% of your loan amount annually. On a $400,000 home with 10% down, PMI could add $150 to $300 per month to your payment until you reach 20% equity.

Beyond avoiding PMI, a larger down payment offers several advantages. You borrow less money, so you pay less total interest over the life of the loan. Lenders may offer better interest rates for larger down payments because you represent less risk. You also start with more equity in your home, providing a financial cushion if property values decline.

Saving for a Down Payment

Building a down payment takes time and discipline. Start by setting a specific savings goal based on your target home price and desired down payment percentage. Automate transfers to a dedicated savings account each payday. Consider high-yield savings accounts to earn more interest while you save. Reduce discretionary spending and redirect that money toward your home fund.

Explore down payment assistance programs available in many states and localities. These programs offer grants, forgivable loans, or low-interest loans to help first-time buyers with their down payment. Some employers also offer housing assistance as a benefit. Check with your state housing finance agency and local housing authorities to see what programs you may qualify for.

Down Payment Sources

Lenders scrutinize down payment sources to ensure the money is legitimately yours. Acceptable sources include personal savings accounts, checking accounts, investment accounts, retirement account withdrawals (with potential penalties), and gifts from family members. Gift funds typically require a gift letter stating the money is not a loan. Recently deposited large sums may require explanation and documentation.

Sources that are generally not acceptable include personal loans, cash advances on credit cards, or undocumented cash. The money must be "seasoned" in your account for at least 60 days before closing, or you need to provide a clear paper trail showing where it came from. Lenders will review your bank statements to verify your down payment funds.

Down Payment Formula

To calculate down payment from percentage: Down Payment = Home Price x (Percentage / 100)

To calculate percentage from amount: Percentage = (Down Payment / Home Price) x 100

Loan amount is simply: Loan Amount = Home Price - Down Payment

For example, on a $400,000 home with a 20% down payment: $400,000 x 0.20 = $80,000 down payment, leaving a $320,000 loan amount. This calculator shows you how these numbers work together and estimates your monthly payment based on current interest rates.