Down Payment Calculator

Calculate how your down payment size affects your monthly mortgage payment, PMI costs, total interest paid, and loan-to-value ratio. Compare different down payment scenarios side by side.

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Down Payment Comparison

Down %Down AmtLoanMonthly P&IPMI/moTotal Interest

How Down Payments Work

A down payment is the upfront cash you put toward a home purchase. The rest is financed through a mortgage. In the United States, down payments typically range from 3% to 20% of the home's purchase price, though some loan programs (like VA loans) allow 0% down.

Why 20% Is the Magic Number

Putting 20% down eliminates the need for Private Mortgage Insurance (PMI), which typically costs 0.5% to 1.5% of the loan amount annually. On a $400,000 home, that's $133 to $400 per month in PMI alone. Reaching the 20% threshold saves thousands over the life of the loan.

Pros and Cons of a Larger Down Payment

Advantages: Lower monthly payments, no PMI requirement, lower interest rate (lenders offer better rates for lower LTV ratios), more equity from day one, and stronger offers in competitive markets.

Disadvantages: Ties up cash that could be invested elsewhere, longer time to save means potentially missing market opportunities, and less cash available for moving costs, repairs, or emergencies.

Loan-to-Value (LTV) Ratio

LTV is the loan amount divided by the home's appraised value. An 80% LTV (20% down) is the standard threshold for avoiding PMI. Lenders view lower LTV ratios as less risky, which can qualify you for better interest rates and terms.

Down Payment Assistance Programs

Many state and local governments offer down payment assistance for first-time homebuyers, including grants, forgivable loans, and matched savings programs. FHA loans require as little as 3.5% down, and USDA and VA loans may require no down payment at all.

Frequently Asked Questions

What is the minimum down payment for a house?
Conventional loans typically require 3-5% minimum. FHA loans require 3.5%. VA and USDA loans may require 0%. However, putting down less than 20% usually means paying PMI.
How much should I save for a down payment?
Financial advisors generally recommend 20% to avoid PMI, but the right amount depends on your financial situation. Factor in closing costs (2-5% of the purchase price), moving expenses, and an emergency fund beyond the down payment.
Does a larger down payment get me a better interest rate?
Yes, generally. Lenders offer lower rates for borrowers with lower LTV ratios because they represent less risk. The difference can be 0.125% to 0.5% or more.
Can I use gift money for a down payment?
Most loan programs allow gift funds for part or all of the down payment, but you'll typically need a gift letter from the donor confirming it's not a loan. FHA, VA, and conventional loans each have specific gift fund rules.
When is PMI removed?
For conventional loans, you can request PMI removal when your loan balance reaches 80% of the original purchase price. It's automatically removed at 78%. FHA loans have different rules — MIP may last the entire loan term.

How Down Payment Affects Your Mortgage

20%: No PMI. 10%: ~$150/month PMI. 3–5%: Higher costs but faster entry.

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