Down Payment Calculator
Calculate your down payment, closing costs, total upfront cash needed, and monthly payment with PMI analysis. Compare 5%, 10%, and 20% down payment scenarios side by side.
Total Upfront Cash Needed
$80,500
Down Payment
$70,000
Closing Costs
$10,500
Monthly Payment
$1,770
β No PMI required
Down Payment Comparison
| 5% Down | 10% Down | 20% Down | |
|---|---|---|---|
| Down Payment | $17,500 | $35,000 | $70,000 |
| Total Upfront | $28,000 | $45,500 | $80,500 |
| Loan Amount | $332,500 | $315,000 | $280,000 |
| Monthly P&I | $2,102 | $1,991 | $1,770 |
| Monthly PMI | $139 | $131 | $0 |
| Total Monthly | $2,240 | $2,122 | $1,770 |
π How Down Payment is Calculated
Determine home price
$350,000 purchase price= $350,000
Calculate down payment
$350,000 Γ 20%= $70,000 down payment
Calculate closing costs
$350,000 Γ 3%= $10,500 closing costs
Total upfront cash needed
$70,000 + $10,500= $80,500 total cash at closing
Rate Comparison
5% Down ($17,500)
+PMI +Higher Payment
Upfront: $28K | Monthly: $2,215 (with PMI)
10% Down ($35,000)
+PMI +Moderate
Upfront: $45.5K | Monthly: $2,101 (with PMI)
20% Down ($70,000)
No PMI | Best Rate
Upfront: $80.5K | Monthly: $1,770
The Opportunity Cost of 20% Down
π‘ How Much Down Payment Do I Need?
What Is a Down Payment?
A down payment is the upfront portion of a home's purchase price that the buyer pays in cash. The remainder is financed through a mortgage loan. For example, on a $350,000 home with a 20% down payment ($70,000), the buyer borrows $280,000. The down payment amount signals financial stability to lenders and directly impacts the loan terms, interest rate, and monthly payment.
Understanding Closing Costs
Beyond the down payment, buyers face closing costs of 2-5% of the purchase price. These include:
- Loan origination fee: 0.5-1% of the loan amount β the lender's processing charge
- Appraisal: $300-$600 β confirms the home's market value
- Home inspection: $300-$500 β identifies potential issues before purchase
- Title search & insurance: $500-$2,000 β verifies legal ownership and protects against title disputes
- Attorney/escrow fees: $500-$1,500 β handles legal paperwork and fund transfers
- Prepaid taxes & insurance: 2-6 months β held in escrow by the lender
- Recording fees: $50-$250 β county charge to record the new deed
Some closing costs are negotiable. Sellers may agree to pay a portion (seller concessions), and some lenders offer "no-closing-cost" loans in exchange for a slightly higher interest rate.
Down Payment Requirements by Loan Type
| Loan Type | Min Down | PMI/MIP | Special Requirements |
|---|---|---|---|
| Conventional | 3-5% | Yes, until 20% equity | Credit score 620+; Fannie Mae HomeReady allows 3% |
| FHA | 3.5% | 1.75% upfront MIP + 0.85%/yr | Credit score 580+; MIP for life of loan unless refinanced |
| VA | 0% | No PMI; funding fee 1.25-3.3% | Veterans, active military, eligible spouses only |
| USDA | 0% | 1% upfront + 0.35%/yr | Rural areas; income must be β€ 115% of area median |
Large vs. Small Down Payment: Pros and Cons
Benefits of a larger down payment (15-20%+):
- Eliminates PMI β saving $100-$400/month on typical loans
- Lower monthly payments and less total interest paid
- Better interest rates β lenders offer 0.125-0.25% lower rates for 20% down
- Stronger offer in competitive markets β sellers prefer well-funded buyers
- Immediate equity cushion protects against home value declines
Benefits of a smaller down payment (3-10%):
- Enter homeownership sooner β don't wait years to save 20%
- Preserve cash for emergencies, renovations, or investments
- Home appreciation benefits you regardless of down payment size
- Investment opportunity cost β uncommitted funds can earn returns elsewhere
5 Sources of Down Payment Funds
- Personal savings β The most common source. High-yield savings accounts and CDs provide safe growth. Automate monthly transfers to a dedicated "home fund" account. At $1,000/month, you'd save $36,000 in 3 years
- Piggyback loans (80-10-10) β Two mortgages: 80% first mortgage + 10% second mortgage (HELOC) + 10% down. Avoids PMI without 20% cash. The second loan typically has a higher rate but lower total cost than PMI
- Down payment assistance programs β Federal (FHA 3.5%, VA/USDA 0%), state housing finance agencies, and local government grants. Many provide forgivable loans that require no repayment if you stay in the home 5+ years. Check HUD.gov for programs in your area
- Gift funds β FHA allows 100% of the down payment as a gift from family. Conventional loans also accept gifts with a formal gift letter stating no repayment is required. The donor typically needs to provide bank statements proving the funds
- Retirement accounts β Roth IRA contributions (not earnings) can be withdrawn anytime without penalty. First-time buyers can withdraw up to $10,000 in earnings penalty-free. 401(k) loans allow borrowing up to $50,000 repaid over 5 years β but this reduces retirement savings growth