Down Payment Calculator
Determine your upfront home buying costs and total loan amount.
Home Purchase Details
Down Payment Amount
$0.00
Total Loan Amount
$0.00
A Complete Guide to Your Mortgage Down Payment
What is a Down Payment?
A down payment is the amount of money you pay upfront when purchasing a home. It’s your initial stake in the property, and it represents the portion of the home’s price that you own immediately, without a loan. The remaining amount is what you borrow from a lender, which becomes your mortgage. For example, if you buy a $400,000 house and make a $80,000 down payment, you will need a mortgage for the remaining $320,000. Our Down Payment Calculator is the perfect tool to help you explore these numbers and plan for your home purchase.
The 20% Down Payment: Myth vs. Reality
You’ve probably heard that you need a 20% down payment to buy a home. While putting down 20% has significant benefits, it’s a common myth that it’s an absolute requirement. In reality, many loan programs allow you to buy a home with much less.
The main reason 20% is considered the “gold standard” is because it allows you to avoid **Private Mortgage Insurance (PMI)**. PMI is an extra monthly fee you pay to protect the lender in case you default on the loan, and it’s typically required on conventional loans when your down payment is less than 20%. Using this Down Payment Calculator can help you see how different percentages affect your loan and whether you’ll need to budget for PMI.
Down Payment Requirements by Loan Type
The amount you need for a down payment depends heavily on the type of mortgage you qualify for:
- Conventional Loans: While 20% is ideal, many lenders offer conventional loans with as little as 3-5% down, especially for first-time homebuyers.
- FHA Loans: These government-backed loans are popular because they allow for down payments as low as 3.5%.
- VA Loans: Eligible veterans and active-duty service members can often purchase a home with 0% down.
- USDA Loans: For homes in eligible rural areas, these loans also offer a 0% down payment option.
Benefits of a Larger Down Payment
Even if you don’t need to put down 20%, making a larger down payment has significant financial advantages. Using a Down Payment Calculator can help you visualize these benefits:
- Lower Monthly Payment: The more you pay upfront, the less you have to borrow. A smaller loan amount means a smaller monthly mortgage payment.
- Less Interest Paid: A smaller loan also means you’ll pay less in total interest over the life of the loan, potentially saving you tens of thousands of dollars.
- Avoid PMI: As mentioned, a down payment of 20% or more allows you to avoid the extra monthly cost of Private Mortgage Insurance.
- Better Interest Rates: Lenders often see a larger down payment as a sign of lower risk, and they may reward you with a more favorable interest rate.
- Instant Equity: Your down payment is your initial equity in the home. More equity gives you more financial flexibility and protection against market downturns.