Down Payment Calculator
Calculate how much you need for a down payment, closing costs, and total cash to close. See PMI estimates for down payments under 20%. See also Mortgage Calculator and Home Loan EMI Calculator.
How to Calculate Down Payment
The down payment is the upfront cash you pay when purchasing a home. To calculate it, multiply the home price by your desired down payment percentage. Add closing costs (typically 2-5% of the home price) to determine total cash needed at closing. If your down payment is less than 20%, you will likely need to pay Private Mortgage Insurance (PMI), which adds to your monthly costs until you build 20% equity.
Down Payment Formula
Down Payment = Home Price × (Down Payment % / 100)
Loan Amount = Home Price − Down Payment
Closing Costs = Home Price × (Closing Cost % / 100)
Total Cash Needed = Down Payment + Closing Costs
PMI (if down < 20%) ≈ Loan Amount × 0.5% to 1.5% / 12
Example
Home Price: $350,000, Down Payment: 20%, Closing: 3%
Down Payment = $350,000 × 0.20 = $70,000
Loan Amount = $350,000 − $70,000 = $280,000
Closing Costs = $350,000 × 0.03 = $10,500
Total Cash Needed = $70,000 + $10,500 = $80,500
PMI: Not required (20% down)
Down Payment Comparison Table
| Home Price | Down % | Down Payment | Loan Amount | Est. PMI/mo | Total Cash* |
|---|---|---|---|---|---|
| $300,000 | 3.5% | $10,500 | $289,500 | $362 | $19,500 |
| $300,000 | 5% | $15,000 | $285,000 | $238 | $24,000 |
| $300,000 | 10% | $30,000 | $270,000 | $158 | $39,000 |
| $300,000 | 20% | $60,000 | $240,000 | $0 | $69,000 |
| $400,000 | 10% | $40,000 | $360,000 | $210 | $52,000 |
| $400,000 | 20% | $80,000 | $320,000 | $0 | $92,000 |
| $500,000 | 15% | $75,000 | $425,000 | $177 | $90,000 |
| $500,000 | 20% | $100,000 | $400,000 | $0 | $115,000 |
* Total cash includes 3% closing costs. PMI estimates are approximate.
Frequently Asked Questions
How much should I put down on a house?
The traditional recommendation is 20% to avoid PMI, but many buyers put down less. FHA loans require as little as 3.5%, and some conventional loans allow 3-5% down. A larger down payment means a smaller loan, lower monthly payments, and no PMI, but it requires more upfront cash.
What is PMI and how much does it cost?
PMI (Private Mortgage Insurance) protects the lender if you default. It's required when the down payment is less than 20%. PMI typically costs 0.5% to 1.5% of the loan amount annually, added to your monthly payment. It can be removed once you reach 20% equity in the home.
What are closing costs?
Closing costs are fees paid at the time of purchase, typically 2-5% of the home price. They include appraisal fees, title insurance, attorney fees, origination fees, recording fees, and prepaid items like property taxes and homeowner's insurance. Some costs are negotiable.
Can I use gift money for a down payment?
Yes, most loan programs allow gift funds for down payments. FHA loans allow 100% of the down payment to be a gift. Conventional loans may require that some portion comes from your own funds. The gift donor typically needs to provide a gift letter confirming the money is not a loan.
Is it better to put 20% down or invest the difference?
It depends on your financial situation. Putting 20% down avoids PMI and reduces your loan amount. However, if you can earn a higher return investing the difference than the cost of PMI plus the mortgage rate, investing may be better mathematically. Consider your risk tolerance and emergency fund needs.
Solved Examples
Example 1: Calculating 20% down payment on a $425,000 home
Solution:
Home Price = $425,000, Target Down Payment = 20%
Down Payment = $425,000 × 0.20 = $85,000
Loan Amount = $425,000 − $85,000 = $340,000
At 7% for 30 years: Monthly Payment = $2,261.99
No PMI required (20% or more eliminates PMI)
Total Interest over 30 years = $474,316
Answer: $85,000 down payment, $2,261.99/month, no PMI required
Example 2: Comparing 5% vs 20% down on a $350,000 home
Solution:
Home Price = $350,000, Rate = 6.75%, Term = 30 years
5% down: Down = $17,500, Loan = $332,500, PMI ≈ $166/mo
Monthly (with PMI) = $2,157.29 + $166 = $2,323.29
20% down: Down = $70,000, Loan = $280,000, No PMI
Monthly = $1,816.36
Monthly savings with 20% down = $506.93
Extra upfront cost = $70,000 − $17,500 = $52,500
Answer: 20% down saves $506.93/month but requires $52,500 more upfront
Example 3: Savings plan to reach $60,000 down payment in 4 years
Solution:
Target = $60,000, Timeline = 4 years (48 months)
If saving in high-yield savings at 4.5% APY:
Monthly deposit needed = $60,000 / FV annuity factor
FV factor = [(1.00375)^48 − 1] / 0.00375 = 52.37
Monthly savings needed = $60,000 / 52.37 = $1,145.50
Total deposited = $1,145.50 × 48 = $54,984
Interest earned = $60,000 − $54,984 = $5,016
Answer: Save $1,145.50/month at 4.5% to reach $60,000 in 4 years
Practice Questions
Try these on your own:
- What is the 20% down payment on a $550,000 home? What is the loan amount? (Answer: Down = $110,000; Loan = $440,000)
- A $300,000 home with 10% down at 7.25% for 30 years. What is the monthly payment (excluding PMI)? (Answer: Loan = $270,000; Monthly = $1,842.07)
- PMI costs 0.5% of loan balance annually. On a $380,000 loan, what is the monthly PMI? (Answer: $380,000 × 0.005 / 12 = $158.33)
- You save $2,000/month. How many months to save a 15% down payment on a $400,000 home? (Answer: $60,000 / $2,000 = 30 months)
- Compare total interest: $500,000 home with 10% vs 25% down at 6.5% for 30 years. (Answer: 10% down: $575,344 interest; 25% down: $479,453 interest; Difference = $95,891)
Common Mistakes to Avoid
The most common mistake is depleting all savings for the down payment, leaving nothing for emergencies, moving costs, or immediate home repairs. Financial advisors recommend keeping 3-6 months of expenses in reserve after closing. Another error is not factoring in closing costs (typically 2-5% of the purchase price) on top of the down payment — on a $400,000 home, that could be an additional $8,000-$20,000. Many buyers also underestimate the cost of PMI when putting less than 20% down; PMI adds $100-$300/month on a typical loan and doesn't build equity. Some people delay buying too long trying to save a full 20%, missing out on home appreciation and years of equity building. Finally, don't forget that gift funds from family members are acceptable for down payments with most loan programs, but they must be properly documented.
Key Takeaways
- 20% down eliminates PMI and significantly reduces monthly payments and total interest.
- A larger down payment means a smaller loan, less interest, and better mortgage rates.
- PMI typically costs 0.3-1.5% of the loan balance annually until you reach 20% equity.
- Don't drain your emergency fund — keep 3-6 months of expenses after closing.
- Factor in closing costs (2-5% of purchase price) beyond just the down payment amount.
- Some loan programs (FHA, VA, USDA) allow 0-3.5% down, but long-term costs are higher.