Down Payment Calculator

A down payment is the upfront cash payment you make when purchasing a home, the portion of the purchase price not covered by your mortgage. Saving enough for a down payment is one of the largest financial milestones most people face.

Key formulas: Down Payment Amount = Home Price × Down Payment % Loan Amount = Home Price − Down Payment Amount LTV Ratio = Loan Amount ÷ Home Price × 100 Monthly Payment = L × [r(1+r)^n] ÷ [(1+r)^n − 1], where L is the loan, r is the monthly rate, and n is the number of monthly payments

What each variable means:

• Down Payment %: the fraction of the home price paid in cash upfront. Common targets: 3%, 5%, 10%, 20%.
• Loan Amount (Principal): what you borrow from the lender. Lower is always better for long-term interest cost.
• LTV (Loan-to-Value) Ratio: the loan as a percentage of the home’s value. Below 80% LTV typically eliminates the need for PMI.
• PMI (Private Mortgage Insurance): required by most conventional lenders when LTV > 80%. It typically runs 0.5–1.5% of the loan amount per year, added to the monthly payment, and it varies with your credit score, your LTV, and the year you are reading this. Enter the rate your lender actually quoted rather than trusting a national average.

Down payment benchmarks and their implications:

• 3%: minimum for many conventional loans (first-time buyers). High PMI.
• 5%: FHA (Federal Housing Administration) style programs. PMI still required.
• 10%: lower PMI, better mortgage rates.
• 20%: no PMI required. Best rates. Industry standard goal.

Worked example

Home price $400,000, 20% down, 6.5% over 30 years.

Down payment = $400,000 × 0.20 = $80,000 Loan = $400,000 − $80,000 = $320,000 LTV = $320,000 ÷ $400,000 = 80%, which is exactly the line where PMI stops Monthly payment = $2,022.62 of principal and interest

Now run the same house at 10% down. The down payment falls to $40,000, which is $40,000 less cash you need on the day. The loan rises to $360,000, the payment rises to $2,275.44, and at a 0.6% PMI rate you add $180 a month until the balance falls under $320,000. So the cheaper entry costs about $433 a month more, and roughly $180 of that buys you nothing but permission to borrow. That comparison, not the down payment on its own, is the decision.

A note on the 20% target: it is a threshold, not a rule. Waiting three extra years to reach 20% while prices climb has cost plenty of buyers more than the PMI would have. Run both.

Closing costs reminder: Budget an additional 2–5% of the purchase price for closing costs (title insurance, appraisal, origination fees). These are due at closing alongside the down payment, and they are the single most common reason a buyer arrives short on the day.