Down Payment Calculator
Calculate how different down payment amounts affect your mortgage payment and total cost.
Results
Visualization
How It Works
This calculator shows how your down payment percentage directly impacts your monthly mortgage payment and total interest paid over the life of your loan. By adjusting your down payment from 3% to 20% or more, you can see exactly how much you'll save on interest and potentially avoid expensive private mortgage insurance (PMI).
The Formula
Variables
- Home Price — The total purchase price of the home you're buying, used as the starting point for calculating your loan amount
- Down Payment % — The percentage of the home price you'll pay upfront in cash, with the remainder financed through a mortgage (e.g., 20% down means you borrow 80%)
- Mortgage Rate % — Your annual interest rate on the loan, expressed as a percentage (current rates typically range from 3% to 8% depending on market conditions and your credit)
- Loan Term — The number of years to repay the mortgage, commonly 15, 20, or 30 years; longer terms mean lower monthly payments but more total interest paid
- Loan Amount — The actual amount you're borrowing, calculated as Home Price minus Down Payment
- Total Monthly Payment — The principal and interest payment due each month; does not include property taxes, insurance, or HOA fees
Worked Example
Let's say you're buying a $350,000 home with a 6.5% interest rate and a 30-year loan term. If you put down 5% ($17,500), your loan amount is $332,500, and your monthly payment would be approximately $2,109. However, if you increase your down payment to 20% ($70,000), your loan amount drops to $280,000, and your monthly payment falls to about $1,774—saving you $335 per month and nearly $120,600 in total interest over 30 years. This example shows why even a modest increase in down payment can have a significant long-term financial impact.
Practical Tips
- Aim for at least 20% down to avoid PMI (private mortgage insurance), which adds 0.5%–1.5% annually to your loan amount until you reach 20% equity. Even a difference of 5 percentage points can save tens of thousands in PMI costs.
- Consider a shorter loan term if you can afford higher monthly payments—a 15-year mortgage at the same rate will cost much less in total interest than a 30-year loan, often saving $100,000+ on a $350,000 home.
- Don't drain your emergency fund to reach a higher down payment; lenders recommend keeping 3–6 months of expenses in savings even after buying. A smaller down payment with PMI is sometimes better than having zero liquid reserves.
- Use this calculator alongside a mortgage pre-approval to see realistic interest rates for your credit profile. Rates vary by credit score, down payment amount, and loan type (FHA, conventional, VA), so check with multiple lenders.
- Remember that this calculator shows principal and interest only; add estimates for property taxes, homeowners insurance, HOA fees, and utilities to see your true housing cost, which typically should not exceed 28% of gross monthly income.
Frequently Asked Questions
What's the minimum down payment required to buy a home?
Conventional loans typically require 3%–5% down, FHA loans allow 3.5% down, and VA loans require 0% down for eligible military members. However, putting down less than 20% triggers PMI, which increases your monthly cost. Some first-time buyer programs offer 3% down options, but the trade-off is higher monthly payments and PMI fees.
How much do I actually save with a larger down payment?
Every 5% increase in down payment roughly saves 5% on the total amount borrowed and interest paid. On a $300,000 home at 6.5% for 30 years, increasing from 10% to 20% down saves approximately $45,000 in total interest and removes PMI from your monthly payment, lowering your monthly cost by $200–250.
Can I avoid PMI without a 20% down payment?
Yes, some programs allow you to avoid PMI with 15% down through lender-paid PMI (the lender covers it but charges a slightly higher interest rate), or you can pay PMI upfront as a lump sum at closing. You can also request PMI removal once you reach 20% equity, though this requires an appraisal and typically takes several years.
Should I use my savings for a larger down payment or invest it instead?
This depends on your interest rate and investment returns. If your mortgage rate is 6.5% and historical stock returns average 7%–10%, investing may yield better returns—but this carries market risk. A safer approach: use savings to reach 20% down (avoiding PMI), then invest additional funds. Always keep 3–6 months of emergency expenses in cash first.
Does a larger down payment affect my interest rate?
Yes, typically a larger down payment qualifies you for a lower interest rate because you represent less risk to the lender. A 20% down payment might earn you a rate 0.25%–0.5% lower than a 5% down payment, which compounds into significant savings over 15–30 years.
Sources
- Consumer Financial Protection Bureau (CFPB): Mortgage Calculator and Buying Resources
- Federal Reserve: Understanding Mortgage Payments and Interest Rates
- HUD (U.S. Department of Housing and Urban Development): FHA Loan Requirements and Down Payments
- Investopedia: How to Calculate a Mortgage Payment
- National Association of Realtors: Home Buyer Guide and Down Payment Strategies