Down Payment Calculator
Compare monthly payment, PMI cost, and cancellation date across multiple down payment scenarios to find the level that balances upfront cash with long-term cost.
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Enter your values above to see the results.
Tips & Notes
- ✓PMI is not wasted money — it enables homeownership with less cash and cancels automatically once you reach 20% equity through payments and appreciation.
- ✓Request PMI removal in writing when your balance reaches 80% LTV based on original purchase price — lenders must cancel at 78% LTV automatically but you can request it at 80%.
- ✓Putting 10% down instead of 5% dramatically shortens the PMI period and reduces monthly PMI cost — often the most efficient use of additional down payment cash.
- ✓Keep at least 3-6 months of expenses liquid after closing — buying with zero emergency reserve leaves you exposed to the first major repair or income disruption.
- ✓Gift funds from family can be used for down payments on most loan types — document the gift letter properly and avoid large cash deposits close to application.
- ✓Down payment assistance programs in most states provide 3-5% in grants or low-interest second loans for first-time buyers below income thresholds.
Common Mistakes
- ✗Draining all savings into the down payment and arriving at closing with no emergency reserve — homeownership creates immediate maintenance costs renters do not face.
- ✗Targeting exactly 20% down when 10-15% would eliminate most PMI cost at a much earlier date — the marginal benefit of the last 5% is smaller than most buyers assume.
- ✗Not accounting for closing costs as a separate cash need — a 20% down payment plus 3% in closing costs requires 23% of the purchase price in total liquid cash.
- ✗Assuming PMI is permanent — conventional loan PMI cancels automatically at 78% LTV and can be requested at 80% LTV, typically within 5-9 years of purchase.
- ✗Choosing FHA over conventional without comparing lifetime MIP — conventional PMI cancels while FHA MIP is permanent with under 10% down, often making conventional cheaper long-term.
- ✗Using retirement account funds for the down payment without modeling the penalty — early 401k withdrawal incurs 10% penalty plus ordinary income tax, often negating the value of a larger down payment.
Down Payment Calculator Overview
The down payment is the first major financial decision in a home purchase. It directly determines your loan amount, monthly payment, whether you pay PMI, your starting equity, and your rate tier. This calculator shows the full picture at any down payment level so you can find the right balance between cash today and cost over time.
What each field means:
- Home Price — the purchase price; determines the raw down payment cash required at each percentage
- Down Payment Pct — percentage of home price paid upfront; 20% is the PMI elimination threshold
- Interest Rate — annual mortgage rate; lower down payments sometimes trigger higher rates
- Loan Term — repayment period; affects monthly payment and total interest
- PMI Rate — annual PMI premium as a percentage of loan; typically 0.5-1.5% annually
What your results mean:
- Down Payment Amount — exact cash required at your chosen percentage
- Loan Amount — what you are financing; every dollar here accrues interest
- Monthly P&I Payment — principal and interest on the loan amount
- Monthly PMI — additional insurance cost; $0 at 20% down or above
- Total Interest Over Loan — all interest paid over the full term; rises significantly with lower down payments
Example — $380,000 home at 6.75% / 30-year term:
5% down ($19,000): loan $361,000 — P&I $2,341 + PMI $270 = $2,611/month 10% down ($38,000): loan $342,000 — P&I $2,218 + PMI $171 = $2,389/month 20% down ($76,000): loan $304,000 — P&I $1,972 + PMI $0 = $1,972/month Monthly gap (5% vs 20%): $639/month — PMI at 5% continues for nearly 10 years Break-even on extra $57,000 down payment: $57,000 / $639 = 89 months (7.4 years)
EX: Is 20% down worth it over 10% down on a $380,000 home? Extra cash needed: $76,000 - $38,000 = $38,000 more Monthly savings: $2,389 - $1,972 = $417/month Break-even: $38,000 / $417 = 91 months (7.6 years) If you sell in 5 years: 10% down is better — keep the $38,000 working elsewhere If you stay 10+ years: 20% down saves significantly after break-even point If you invest $38,000 at 7%: it grows to ~$61,000 in 7.6 years — investing may beat extra down payment
Monthly payment by purchase price and down payment (6.75% / 30yr):
| Purchase Price | 5% down | 10% down | 20% down |
|---|---|---|---|
| $250,000 | $1,626 + PMI | $1,459 + PMI | $1,297 |
| $350,000 | $2,276 + PMI | $2,043 + PMI | $1,816 |
| $450,000 | $2,926 + PMI | $2,627 + PMI | $2,335 |
PMI cost and cancellation timeline — $350,000 purchase, 6.75%:
| Down Payment | Loan Amount | Monthly PMI | PMI Cancels |
|---|---|---|---|
| 5% ($17,500) | $332,500 | ~$275 | Year 9 (month 109) |
| 10% ($35,000) | $315,000 | ~$184 | Year 6 (month 77) |
| 15% ($52,500) | $297,500 | ~$99 | Year 4 (month 45) |
| 20% ($70,000) | $280,000 | $0 | Never needed |
The down payment decision is ultimately a question about the best use of available capital. Depleting all savings to reach 20% down leaves zero emergency reserve — and homeownership creates maintenance costs that renters never face. Most financial planners recommend keeping at least 3-6 months of expenses in liquid savings after closing, even if it means paying PMI for several years. PMI at 10% down on a $350,000 home totals roughly $14,000 before cancellation — meaningful, but less than the financial risk of owning a home with no cash cushion.
Frequently Asked Questions
The technical minimum is 3% for conventional first-time buyer programs, 3.5% for FHA, and 0% for VA and USDA. But the financially optimal amount depends on your situation. The key threshold is 20% — below it, PMI adds $100-$300/month. The break-even on a larger down payment versus paying PMI and investing the difference depends on your rate of return assumptions and how long you plan to stay. For most buyers, 10% down is a pragmatic target: it meaningfully reduces PMI cost and duration without depleting emergency savings completely.
At mortgage rates of 6.5-7%, avoiding PMI by putting 20% down provides a guaranteed 6.5-7% return on that capital — competing favorably with bonds but below long-term equity market averages. If your mortgage rate is below 5%, investing the extra down payment in diversified equity has historically been the better long-term choice. Above 6%, the math gets closer. The qualitative factor: market returns are uncertain while mortgage rate savings are guaranteed. Risk-averse buyers who sleep better with less debt often rationally prefer the larger down payment regardless of the math.
PMI on conventional loans has two cancellation triggers. Automatic cancellation: the lender must cancel PMI when the loan balance reaches 78% of the original purchase price based on scheduled payments — even without your request. Borrower-requested cancellation: you can request in writing when the balance reaches 80% of the original purchase price, with some lenders accepting a new appraisal showing current value has reached the 80% threshold earlier. FHA MIP works differently — with under 10% down, MIP is permanent for the loan life; with 10%+ down, it cancels after 11 years.
Fannie Mae and Freddie Mac programs offer 3% minimum for first-time buyers (someone who has not owned a primary residence in the past 3 years) and 5% for repeat buyers. Putting less than 20% down requires PMI. The 3% programs (HomeReady and Home Possible) have income limits and require homebuyer education courses. For buyers with strong credit and stable income, 5-10% down with a plan to request PMI removal within 5-8 years is a common and financially sound approach to balancing upfront cash with ongoing cost.
Yes — all major loan types allow down payment funds from family gifts, with documentation requirements varying. Conventional loans accept gifts from family members or domestic partners with a gift letter stating no repayment is expected. FHA allows gifts from family, employers, charitable organizations, and government programs. VA and USDA allow gifts similarly. The lender typically requires a signed gift letter, verification of funds in the donor account, and traceable transfer by check or wire — not cash, which creates documentation problems for underwriting.
Down payment affects rate through the loan-to-value ratio. Lenders price mortgage risk partly based on how much equity the buyer has at purchase. Generally, each major LTV tier — 95%, 90%, 85%, 80% — triggers a different rate adjustment. The total rate impact across the full spectrum is typically 0.1-0.4% in rate differential. Additionally, putting 20% down eliminates PMI, which when combined with the slightly lower rate can reduce total housing costs by $400-600/month compared to 5% down on the same loan amount.