How the Down Payment Calculator Works
A down payment is the part of a home's price that you pay in cash on the day you buy. The rest is the mortgage. The size of the down payment affects almost everything: how big your loan is, how much you pay each month, whether you must pay mortgage insurance, and how much interest you pay over the years. The Down Payment Calculator shows how much you need, what it does to your payment, and how long it will take you to save it.
What you enter
- Home price and down payment percentage: what you plan to pay, and the share you aim to put down.
- Interest rate and loan term: for the mortgage.
- Closing costs: the fees you pay on top of the down payment, often 2% to 5% of the price.
- Mortgage insurance rate: a yearly percentage of the loan, charged when you put down less than 20%.
- Your savings: what you have saved so far, what you can save each month, and the yearly return on your savings.
The formulas
down payment = price x down payment percentage closing costs = price x closing cost percentage total cash needed = down payment + closing costs loan = price - down payment
The monthly loan payment uses the standard formula, where P is the loan, r is the monthly rate and n is the number of months:
payment = P x r x (1 + r)^n / ((1 + r)^n - 1)
If the down payment is less than 20% of the price, mortgage insurance is added: the loan times the yearly rate, divided by 12. It lasts until you owe 80% or less of the price. The payment shown is principal, interest and mortgage insurance. Property tax and home insurance come on top.
A worked example
You want to buy a $350,000 home with 10% down. The rate is 6.5% for 30 years, closing costs are 3%, and mortgage insurance is 0.7% a year.
| Result | Amount |
|---|---|
| Down payment (10%) | $35,000 |
| Closing costs (3%) | $10,500 |
| Total cash needed | $45,500 |
| Loan amount | $315,000 |
| Loan payment | $1,991.01 |
| Mortgage insurance | $183.75, for about 7 years 11 months |
| Monthly total | $2,174.76 |
Comparing down payments
On the same $350,000 home:
| Down payment | Amount | Mortgage insurance | Monthly payment | Cash needed |
|---|---|---|---|---|
| 3% | $10,500 | $198 | $2,344 | $21,000 |
| 5% | $17,500 | $194 | $2,296 | $28,000 |
| 10% | $35,000 | $184 | $2,175 | $45,500 |
| 15% | $52,500 | $174 | $2,054 | $63,000 |
| 20% | $70,000 | none | $1,770 | $80,500 |
| 25% | $87,500 | none | $1,659 | $98,000 |
Chart: the monthly payment by down payment
3% down ████████████████████████████████████████ $2,344 5% down ███████████████████████████████████████ $2,296 10% down █████████████████████████████████████ $2,175 15% down ███████████████████████████████████ $2,054 20% down ██████████████████████████████ $1,770 25% down ████████████████████████████ $1,659
Going from 10% to 20% down lowers the payment by $405 a month. Part of that is the mortgage insurance you no longer pay, and part is the smaller loan.
How long will it take to save?
Enter what you have saved, and what you can add each month. The calculator lets your savings grow at the return you choose, and finds the first month when the total reaches the cash you need. With $15,000 saved, $1,000 added each month and a 4% return, you would reach the $45,500 in 28 months, which is 2 years and 4 months. The chart shows your savings growing toward the goal.
What is the right down payment?
- 20% is a classic target, because it avoids private mortgage insurance and gives a lower payment. But it is not required.
- Smaller down payments let you buy sooner, but the loan, the interest and the monthly cost are higher.
- Keep some cash. After the down payment and closing costs, you still need savings for repairs, moving and emergencies.
- Special loans can allow as little as 0% to 3.5% down. Ask a lender which programs you qualify for.
What this calculator does not include
- Property tax, home insurance and HOA fees, which are added to the monthly cost.
- Special mortgage insurance rules, such as those for FHA loans, which have their own premiums.
- Taxes on your savings returns, and changes in the price of homes while you save.
- Grants and help for first-time buyers, which some areas offer.
This tool gives an estimate for general information only. It is not financial advice. Your lender can give you exact figures.