Down Payment Calculator
How Your Down Payment Affects Everything
The down payment is one of the most consequential decisions in the homebuying process. It affects your loan amount, your monthly payment, whether you owe PMI, your interest rate, and how quickly you build equity. This calculator shows you the full picture at any down payment percentage so you can make an informed choice.
How to Use This Calculator
Enter the home price, your planned down payment percentage, the interest rate you expect, and your preferred loan term. If your down payment is under 20%, adjust the PMI rate to match your lender's quote (0.5–1.5% is typical). Hit Calculate to see your down payment amount, loan size, monthly payment, PMI cost, and total interest over the life of the loan.
How the Math Works
Monthly PMI (if required) = Loan amount × PMI rate ÷ 12. PMI is removed once you reach 80% LTV (20% equity), either through principal payments, appreciation, or a formal appraisal.
Real-World Example
Using the defaults - $400,000 home, 10% down, 6.5% rate, 30 years:
- Down payment: $40,000
- Loan amount: $360,000
- LTV: 90% - PMI required
- Monthly P&I: ~$2,275
- Monthly PMI (0.85%): ~$255
- Total monthly: ~$2,530
Now compare to 20% down ($80,000):
- Loan amount: $320,000
- LTV: 80% - no PMI
- Monthly P&I: ~$2,023
- Monthly savings vs 10% down: ~$507/month
- Total interest saved over 30 years: ~$55,000
The larger down payment requires $40,000 more upfront but saves $507/month and over $55,000 in total interest and PMI. The break-even on the extra $40,000 is roughly 79 months (~6.5 years).
What Is PMI and When Can You Remove It?
Private Mortgage Insurance (PMI) protects the lender - not you - against default when your equity is below 20%. It adds meaningful monthly cost with no direct benefit to you, which is why reaching 20% equity is a common financial goal for homeowners.
Ways to eliminate PMI:
- Put 20% down at purchase - no PMI from day one
- Pay down principal - once your loan balance reaches 80% of the original purchase price, you can request PMI removal
- Appreciation + paydown - if your home's value rises, you may reach 20% equity sooner; request a new appraisal and petition your lender
- Automatic termination - federal law (Homeowners Protection Act) requires lenders to automatically cancel PMI when your loan balance reaches 78% of the original purchase price
Choosing the Right Down Payment
- 3–5% down - minimum for most conventional loans. Gets you in the door with less cash but means higher monthly costs and PMI for years.
- 10% down - reduces PMI somewhat and lowers the loan amount, but PMI still applies until you reach 20% equity.
- 20% down - eliminates PMI entirely, qualifies you for better rates, and gives you immediate equity cushion.
- More than 20% - further reduces monthly payments and total interest, but ties up more liquid assets in a relatively illiquid investment.
The right answer depends on your savings, cash flow, emergency fund, and alternative uses for the capital. Don't drain your emergency fund to hit 20% - financial stability matters more than avoiding PMI.
Frequently Asked Questions
What's the minimum down payment required?
For conventional loans: 3% (for first-time buyers) or 5% otherwise. FHA loans: 3.5% with a credit score of 580+. VA and USDA loans: 0% down for eligible borrowers. Jumbo loans (above conforming limits) typically require 10–20%. The minimum gets you in the door, but a larger down payment reduces your ongoing costs significantly.
Is it better to put more down or invest the extra cash?
It depends on the comparison. Putting more down earns a guaranteed return equal to your mortgage interest rate (by reducing the loan). If your rate is 6.5%, putting extra money down is like earning 6.5% risk-free. That's hard to beat consistently in the market after taxes. However, keeping liquidity for emergencies and capturing employer retirement matches first are generally higher priorities.
What is LTV and why does it matter?
Loan-to-Value (LTV) ratio is your loan amount divided by the home's value. LTV of 80% or lower (20%+ down) eliminates PMI and typically qualifies you for the best interest rates. Higher LTV means more risk to the lender, which translates to PMI requirements and sometimes slightly higher rates.
Can down payment assistance programs help?
Yes - many state and local programs offer grants, forgivable loans, or deferred-payment loans to help with down payments, especially for first-time buyers. Eligibility typically depends on income, location, and whether it's your first home. Check your state's housing finance agency website for current programs in your area.
What other upfront costs should I plan for?
Beyond the down payment, budget for closing costs (2–5% of the purchase price), a home inspection ($300–$500), an appraisal ($400–$700), and initial moving and setup costs. On a $400,000 home, closing costs alone can add $8,000–$20,000 to your upfront cash requirement. Use our mortgage calculator to see the full monthly cost picture.