Down Payment Calculator - Home Buying Costs
See how 5%, 10%, or 20% down affects your mortgage payment, PMI, and total interest over the loan.
Formula
Down Payment = Home Price × Percentage
Down payment is the upfront cash paid toward home purchase. 20% down avoids PMI and typically secures better interest rates, but lower down payments make homeownership accessible sooner.
Worked Examples
Example 1: Compare Down Payment Scenarios
Problem:$350,000 home. Compare 5%, 10%, and 20% down payments at 6.5% interest.
Solution:5% Down ($17,500):\nLoan: $332,500\nMonthly P&I: $2,102\nPMI: ~$138/month\nTotal monthly: $2,240\n\n10% Down ($35,000):\nLoan: $315,000\nMonthly P&I: $1,992\nPMI: ~$131/month\nTotal monthly: $2,123\n\n20% Down ($70,000):\nLoan: $280,000\nMonthly P&I: $1,770\nPMI: $0\nTotal monthly: $1,770\n\nDifference 5% vs 20%:\nSave $470/month with 20% down\nOver 30 years before PMI drops: saves $169,200!
Result:20% down saves $470/month and $169K total
Example 2: PMI Break-Even Analysis
Problem:You have $70,000. Put it all down (20%) or invest $52,500 and put $17,500 down (5%)?
Solution:Scenario A: 20% down ($70,000)\nNo PMI, better rate (6.25%)\nPayment: $1,727/month\n\nScenario B: 5% down ($17,500), invest $52,500\nPMI: $138/month, worse rate (6.5%)\nPayment: $2,240/month\nInvestment at 8% return: $4,200/year\n\nDifference:\nB costs $513/month more ($138 PMI + higher payment)\nB earns $350/month from investments\nNet: A is still $163/month better\n\nConclusion: Even with 8% investment returns, 20% down wins due to PMI avoidance and better rate. Plus guaranteed return vs. market risk.
Result:20% down wins even with 8% investment returns
Example 3: First-Time Buyer with Limited Savings
Problem:$280,000 home, saved $15,000. Show options with FHA vs. conventional low-down.
Solution:FHA 3.5% Down:\nDown: $9,800\nUpfront MIP (1.75%): $4,729 (can roll into loan)\nLoan (with MIP): $274,929\nMonthly P&I: $1,740\nMonthly MIP (0.55%): $124\nTotal: $1,864/month\nCash needed: ~$19,000\n\nConventional 5% Down:\nDown: $14,000\nLoan: $266,000\nMonthly P&I: $1,683\nPMI: $111/month\nTotal: $1,794/month\nCash needed: ~$22,000\n\nWith $15,000 saved:\nFHA fits budget, has cash left\nConventional is slightly cheaper monthly but needs more cash upfront\n\nFHA makes sense here - less cash needed at closing, only $70/month more.
Result:FHA works best with limited savings
Frequently Asked Questions
How much down payment do I need?
Minimum down payments vary by loan type: Conventional loans allow as low as 3% with strong credit, FHA requires 3.5%, VA and USDA loans offer 0% down for eligible borrowers. However, 20% down payment is ideal to avoid private mortgage insurance (PMI) and secure better interest rates. The more you put down, the lower your monthly payment and total interest paid. But don't drain emergency funds - maintain 3-6 months of expenses after closing.
Should I put 20% down or invest the money?
The 20% vs. invest debate depends on opportunity cost. Benefits of 20% down: no PMI ($100-200/month saved), lower interest rate (0.25-0.5% better), smaller loan, instant equity cushion against price declines. Benefits of investing difference: potential higher returns (stocks average 7-10% vs. mortgage interest saved of 6-7%), maintains liquidity for emergencies or opportunities. If mortgage rate is 6.5% and you avoid 0.75% PMI, putting 20% down gives a guaranteed 7.25% return. Hard to beat risk-free.
What if I can only afford 5% down?
Many lenders offer conventional loans with just 3-5% down. You'll pay PMI until reaching 20% equity, but you can buy sooner rather than waiting years to save 20%. Strategies to handle low down payment: Keep an excellent credit score for best rates, budget for PMI in your payment calculations, make extra payments to reach 20% equity faster and remove PMI, consider FHA if conventional PMI is too high. Buying with 5% down at age 28 may be smarter than waiting until 33 with 20% down - you build equity for 5 extra years.
Where can down payment money come from?
Acceptable sources: Your savings (most common), gift from family (requires gift letter), grants (first-time buyer programs, down payment assistance), proceeds from selling previous home, retirement account withdrawal (401k loan or Roth IRA contributions), inheritance. Unacceptable: borrowed money (unsecured loans), money that must be repaid. Lenders verify sources through bank statements showing the money 'seasoned' (in your account) for 60+ days.