Down Payment Calculator
Know your available cash and desired down payment percentage? Find the maximum home price you can afford.
Affordable Home Price
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Know the home price you're targeting? Calculate the total upfront cash you need to have ready at closing.
Total Cash Needed
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Know the home price and how much cash you have? Find your effective down payment percentage and see if PMI applies.
Your Down Payment
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Understanding Down Payments
This calculator offers three approaches to help you plan your home purchase. Use the first mode to discover your affordable home price based on the cash you have. Use the second to find out exactly how much cash you need for a specific home. Use the third to see what down payment percentage your available funds represent — and whether PMI will apply.
What Is a Down Payment?
A down payment is the portion of a home's purchase price you pay upfront — out of pocket — at closing. The remainder is financed through a mortgage. For example, on a $400,000 home with a 10% down payment, you would pay $40,000 at closing and borrow the remaining $360,000. Down payment size directly affects your loan amount, monthly payment, interest paid over the life of the loan, and whether you're required to carry Private Mortgage Insurance (PMI).
Closing Costs: The Other Upfront Expense
Your down payment is not the only cash you need at closing. Closing costs — which cover origination fees, appraisal, title insurance, attorney fees, prepaid taxes, and homeowner's insurance — typically add another 2% to 5% of the purchase price to your upfront bill. This calculator defaults to 3%, which is a reasonable middle estimate. Always request a Loan Estimate from your lender to get an accurate figure for your specific transaction.
The 20% Threshold and PMI
On conventional loans, a down payment of at least 20% eliminates the requirement for Private Mortgage Insurance (PMI) — a lender-protection policy that costs the borrower between 0.2% and 2% of the loan amount per year. PMI is automatically cancelable once your loan balance drops to 80% of the original home value, but it represents a meaningful extra cost in the meantime.
Home Price = $400,000 | Down Payment = 5% ($20,000)
Loan Amount = $380,000 | PMI ≈ 0.8% annually
Extra PMI Cost ≈ $253/month until 20% equity is reached
Putting down less than 20% is not necessarily a bad decision, but you should factor PMI cost into your monthly budget projections until you accumulate sufficient equity.
Benefits of a Larger Down Payment
A bigger down payment means a smaller loan, lower monthly payments, less total interest paid, and no PMI on conventional loans. Lenders also view larger down payments favorably, often unlocking better interest rates and easier approvals for borrowers who can demonstrate financial discipline.
The Case for a Smaller Down Payment
Putting less down preserves liquidity for renovations, an emergency fund, retirement contributions, or higher-yield investments. Many buyers — especially first-timers — cannot wait until they have 20% saved, and low down payment programs (3–3.5%) exist precisely to help them enter homeownership sooner.
Loan Programs and Requirements
Conventional loans (Fannie/Freddie) require as little as 3% down. FHA loans allow 3.5% down with a credit score of 580+, but require upfront and ongoing mortgage insurance premiums. VA loans (eligible veterans) and USDA loans (eligible rural areas) offer zero down payment options to qualified buyers.
Opportunity Cost to Consider
Every dollar tied up in a down payment is a dollar not invested elsewhere. In a rising market, a larger down payment can mean missing out on investment returns that exceed your mortgage rate savings. In a declining market, a large down payment can erode quickly as home values fall. Weigh both scenarios before maximizing your down payment.
Where to Source Your Down Payment
Personal Savings
The most straightforward path: set a target, open a dedicated high-yield savings account or CD ladder, and contribute consistently. Automating transfers on payday is proven to accelerate accumulation.
Down Payment Assistance Programs
State and local housing agencies — as well as many nonprofits — offer grants and low-interest second loans to eligible first-time buyers. Programs are income- and geography-specific; search the HUD website or your state's housing finance agency for available options in your area.
Gift Funds
FHA and many conventional programs allow down payment funds to be gifted by a family member, provided the lender receives a signed gift letter confirming the funds are not a loan. The donor may need to provide bank statements to document the transfer.
IRA and 401(k) Funds
First-time buyers may withdraw up to $10,000 from a traditional or Roth IRA penalty-free for a home purchase (though income taxes may apply on traditional IRA withdrawals). A 401(k) loan — up to $50,000 or 50% of the vested balance, whichever is less — is another option, but it must be repaid with interest within five years and reduces your retirement runway. Use retirement funds only as a last resort after exhausting other options.
Piggyback Loans
An 80-10-10 structure uses a primary mortgage for 80% of the home price, a second loan (home equity or HELOC) for 10%, and a 10% down payment from savings. This avoids PMI without requiring a 20% down payment, but means managing two loan obligations simultaneously — and qualifying for both.
Key Takeaways
- Budget for both the down payment and closing costs (typically 2–5% of the purchase price) when planning your upfront cash needs.
- A 20% down payment on a conventional loan eliminates PMI, but smaller down payment programs (3–3.5%) exist for qualified buyers who need to act sooner.
- Larger down payments reduce your loan amount, monthly payment, and total interest cost — but tie up capital that could otherwise be invested or held as an emergency reserve.
- VA and USDA loans offer zero down payment options for eligible borrowers — FHA loans require just 3.5% down with a 580+ credit score.
- Down payment assistance programs, gift funds, and IRA/401(k) provisions can supplement personal savings — research all available channels before committing to a financing plan.