Down Payment Calculator
See how much you need for a home down payment at common percentages and plan your purchase.
Your Selected Down Payment
How Down Payments Work
A down payment is the upfront cash you pay when purchasing a home. It is expressed as a percentage of the home's purchase price. The remaining amount is financed through a mortgage loan.
Common down payment amounts:
3% -- Minimum for conventional loans (Fannie Mae/Freddie Mac). Requires PMI.
5% -- Common starter option. Still requires PMI but lower monthly cost.
10% -- Reduces PMI costs and lowers monthly payments.
20% -- The traditional recommendation. Eliminates Private Mortgage Insurance (PMI) entirely, saving you hundreds per month.
Private Mortgage Insurance (PMI) is typically required when your down payment is less than 20%. PMI usually costs between 0.5% and 1% of the loan amount per year.
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Understanding Home Down Payments
A down payment is the upfront cash payment you make when purchasing a home, expressed as a percentage of the purchase price. The down payment directly affects your mortgage amount, monthly payment, interest rate, and whether you need Private Mortgage Insurance (PMI). It is one of the most significant financial decisions in the home-buying process.
While 20% has traditionally been considered the gold standard for a down payment, the reality is that many buyers put down far less. The median down payment for first-time homebuyers in the US is approximately 6-7%. Various loan programs make lower down payments possible: conventional loans allow as little as 3%, FHA loans require 3.5%, and VA and USDA loans offer 0% down payment options for eligible buyers.
The trade-off is clear: a smaller down payment gets you into a home sooner, but it means a larger loan, higher monthly payments, more total interest, and the added cost of PMI. A larger down payment reduces all of these costs and gives you instant equity in your home -- a financial cushion that protects you if property values decline.
Step-by-Step Down Payment Comparison
For a $400,000 home at 6.5% interest, 30-year term, comparing down payment options:
5% down ($20,000): Loan: $380,000. Monthly P&I: $2,402. PMI: ~$222/mo. Total monthly: $2,624. Total interest over 30 years: $484,767.
10% down ($40,000): Loan: $360,000. Monthly P&I: $2,276. PMI: ~$150/mo. Total monthly: $2,426. Total interest: $459,359.
20% down ($80,000): Loan: $320,000. Monthly P&I: $2,023. PMI: $0. Total monthly: $2,023. Total interest: $408,319.
Difference: Going from 5% to 20% down saves $601/month and $76,448 in total interest, plus eliminates PMI entirely. However, it requires $60,000 more upfront -- a significant amount that could also be invested elsewhere.
Down Payment Strategies and Tips
Down payment assistance programs: Many states, counties, and cities offer grants or low-interest loans to help with down payments, especially for first-time buyers. FHA, USDA, and VA loans also reduce or eliminate down payment requirements. Research programs available in your area at downpaymentresource.com.
Saving for a down payment: Open a dedicated high-yield savings account and automate monthly deposits. At $1,500/month saved into a 4.5% APY account, you will reach $40,000 (10% on a $400,000 home) in about 25 months. Consider saving tax refunds, bonuses, and side income as lump-sum boosts.
PMI is not permanent: Once you reach 20% equity (through payments or home appreciation), you can request PMI removal. At 22% equity, your lender must automatically remove it. PMI typically costs 0.5-1% of the loan amount annually, so on a $380,000 loan, that is $1,900-$3,800/year ($158-$317/month).
Do not drain all savings for the down payment: Keep 3-6 months of expenses in an emergency fund after closing. New homeowners face unexpected expenses (repairs, appliances, furniture) that can strain finances if you put every dollar into the down payment. Aim for 20% down, but not at the expense of financial stability.
Down Payment Reference Table
Down payment amounts and loan sizes for common home prices:
| Home Price | 3% Down | 5% Down | 10% Down | 20% Down |
|---|---|---|---|---|
| $250,000 | $7,500 | $12,500 | $25,000 | $50,000 |
| $350,000 | $10,500 | $17,500 | $35,000 | $70,000 |
| $400,000 | $12,000 | $20,000 | $40,000 | $80,000 |
| $500,000 | $15,000 | $25,000 | $50,000 | $100,000 |
| $650,000 | $19,500 | $32,500 | $65,000 | $130,000 |
| $800,000 | $24,000 | $40,000 | $80,000 | $160,000 |
Frequently Asked Questions
Do I really need 20% down to buy a house?
No. While 20% eliminates PMI and gets better rates, many loan programs accept less. Conventional loans allow 3%, FHA requires 3.5%, and VA/USDA offer 0% down. First-time buyer programs and down payment assistance can help bridge the gap. Evaluate the trade-offs of PMI cost versus waiting longer to save more.
What is PMI and how much does it cost?
Private Mortgage Insurance protects the lender (not you) if you default with less than 20% equity. PMI costs 0.5-1% of the loan amount annually, added to your monthly payment. On a $380,000 loan, that is $158-$317/month. PMI can be removed once you reach 20% equity through payments or appreciation.
Can I use gift money for a down payment?
Yes, most loan programs allow gift funds from family members for the down payment. You will need a gift letter stating the money is a gift (not a loan) and documentation of the transfer. FHA loans allow 100% of the down payment to be a gift. Conventional loans may require you to contribute a portion from your own funds.
What are closing costs in addition to the down payment?
Closing costs typically add 2-5% of the home price and include origination fees, appraisal, title insurance, attorney fees, and prepaid items (taxes, insurance). On a $400,000 home, budget $8,000-$20,000 for closing costs in addition to your down payment. Some sellers will negotiate paying part of the closing costs.
Should I put more down to get a lower interest rate?
Yes, generally. Lenders offer better rates with larger down payments because it reduces their risk. The rate improvement is typically 0.125-0.25% when going from 5% to 20% down. Combined with PMI elimination, this can save $200-$400/month on a $400,000 home purchase.
Can I withdraw from my 401k for a down payment?
You can, but it is generally not recommended. Early 401k withdrawals incur a 10% penalty plus income tax. A 401k loan (up to $50,000) avoids the penalty but must be repaid within 5 years and can hurt your retirement savings. First-time buyers can withdraw up to $10,000 from an IRA without the 10% penalty (still taxed as income).
How long does it take to save for a down payment?
Depends on your target and savings rate. Saving $1,500/month at 4.5% APY, you can reach $20,000 (5% on a $400K home) in about 13 months, $40,000 (10%) in 25 months, and $80,000 (20%) in 47 months. Windfalls (tax refunds, bonuses) can significantly accelerate the timeline.
Is it better to wait for 20% or buy now with less?
It depends on your local market and financial situation. If home prices are rising 5% per year, a $400,000 home costs $420,000 next year. The $20,000 increase may exceed what you save in PMI avoidance by waiting. However, if you would deplete your savings or stretch your budget too thin, waiting is wiser. Run the numbers for your specific situation.