Down Payment Calculator

How to Use This Calculator

Step 1: Enter Your Home Price and Down Payment Target

Enter the price of the home you want to buy and your target down payment percentage. A 20% down payment avoids PMI, while FHA loans allow as little as 3.5% down.

Step 2: Enter Your Current Savings and Monthly Contribution

Enter how much you've already saved toward the down payment and how much you can contribute each month. If you're just starting out, enter $0 for current savings.

Step 3: See Your Timeline and Interest Earnings

The calculator shows exactly how many years and months it will take to reach your goal, along with how much interest your savings will earn along the way — a powerful motivator to keep going.

Understanding Down Payments

Down Payment Percentages and Their Trade-Offs

The down payment you choose affects your monthly payment, total interest, and whether you pay PMI. At 3% down on a $400,000 home, you bring $12,000 to closing but finance $388,000 and pay PMI. At 10% down ($40,000), your loan is smaller and PMI costs are lower. At 20% down ($80,000), you avoid PMI entirely and get the lowest monthly payment. Each percentage point of down payment reduces your loan by the home price amount, so on a $400,000 home, going from 10% to 15% saves you $20,000 in borrowed money and years of interest.

How PMI Affects Total Homeownership Cost

Private Mortgage Insurance typically costs 0.5% to 1.5% of the loan amount per year. On a $380,000 loan, that is $1,900 to $5,700 annually, or $158 to $475 added to your monthly payment. PMI does not build equity or benefit you in any way; it protects the lender. Most conventional loans allow you to cancel PMI once you reach 20% equity through payments or appreciation, but FHA loans require mortgage insurance for the life of the loan. Factor PMI into your total cost when deciding whether to wait longer for a larger down payment or buy sooner with less down.

Strategies for Accelerating Your Down Payment Savings

Open a high-yield savings account earning 4% to 5% so your balance grows while you save. Automate biweekly transfers that align with your paycheck so saving happens before spending. Direct windfalls like tax refunds, bonuses, or gift money straight to your down payment fund. If your timeline is 2 or more years out, consider a CD ladder to lock in higher rates on portions of your savings. Use our savings goal calculator to set monthly targets for non-housing goals so your other savings stay on track too. Once you buy, our biweekly mortgage calculator can show you how to pay off your mortgage faster.

Frequently Asked Questions

How much should I save for a down payment?

The minimum down payment depends on your loan type. Conventional loans require as little as 3%, while FHA loans require 3.5%. However, putting down 20% avoids Private Mortgage Insurance (PMI), which can add meaningfully to your monthly costs. On a $400,000 home, a 20% down payment equals $80,000. The right target depends on your financial situation, timeline, and the loan programs available to you.

What is PMI and how do I avoid it?

Private Mortgage Insurance (PMI) is required by lenders when your down payment is less than 20% of the home's purchase price. It typically costs between 0.5% and 1.5% of the loan amount per year, adding hundreds of dollars to your monthly payment. You can avoid PMI by making a 20% down payment, choosing a VA or USDA loan if you qualify, or using a piggyback loan structure where a second loan covers part of the down payment.

How can I save for a down payment faster?

To accelerate your down payment savings: open a high-yield savings account to earn more interest on your balance, cut discretionary spending and redirect those funds to your down payment account, automate monthly transfers so saving happens before you can spend, consider a side income or freelance work to boost your monthly contribution, and look into down payment assistance programs offered by state and local housing agencies that may provide grants or low-interest loans.

Can I use gift money for a down payment?

Yes, most mortgage loan programs allow gift funds from family members to be used toward a down payment. Lenders typically require a gift letter from the donor stating the amount given, the relationship to the borrower, and confirmation that the funds are a gift and do not need to be repaid. Some loan programs have restrictions on gift fund usage, so always check with your lender to understand the specific requirements for your loan type.

Is it better to put 20% down or invest the difference?

Putting 20% down avoids PMI and reduces your monthly payment, which is a guaranteed savings. Investing the difference could potentially earn higher returns, but comes with market risk. If PMI costs 0.5% to 1% of your loan annually, you need consistent investment returns above that rate after taxes to come out ahead. For most buyers, avoiding PMI provides a reliable, risk-free benefit that is hard to beat with uncertain market returns.

What are down payment assistance programs?

Many state and local housing agencies offer down payment assistance programs for first-time homebuyers or buyers in certain income brackets. These programs may provide grants that do not need to be repaid, low-interest second mortgages, or matched savings programs. Eligibility requirements vary by location, but they can significantly reduce the amount you need to save. Check with your state housing finance agency or a HUD-approved housing counselor to see what is available in your area.