Down Payment Calculator

How Much Should You Put Down?

The ideal down payment depends on your financial situation, goals, and the type of loan you're getting. While 20% is often recommended to avoid Private Mortgage Insurance (PMI), it's not always the best choice. FHA loans require as little as 3.5% down, VA loans require 0% down for eligible veterans, and conventional loans can go as low as 3% down. This calculator helps you compare different down payment scenarios to find the optimal choice for your situation.

Impact of Down Payment on Your Mortgage

Your down payment affects several aspects of your mortgage:

• Loan amount: Higher down payment = smaller loan = lower monthly payment
• Interest rate: Larger down payments often qualify for better rates (0.25-0.5% lower)
• PMI requirement: Less than 20% down requires PMI on conventional loans
• Monthly payment: Lower loan amount + no PMI = significantly lower payment
• Total interest: Smaller loan = less interest paid over the life of the loan
• Equity: Higher down payment = more immediate equity in your home

Understanding PMI (Private Mortgage Insurance)

PMI protects the lender if you default on your loan. It's required for conventional loans with less than 20% down payment:

• Cost: Typically 0.3-1.5% of loan amount annually
• Monthly cost: Added to your monthly mortgage payment
• Removal: Automatically removed at 78% LTV, or can be requested at 80% LTV
• FHA loans: Require mortgage insurance premium (MIP) for life if down payment < 10%
• VA loans: No PMI required, but have a funding fee
• Example: $280,000 loan with 1% PMI = $233/month extra

Down Payment Scenarios Compared

Here's how different down payments compare for a $350,000 home at 6.5% interest:

• 3.5% down ($12,250): Loan $337,750, Monthly P&I $2,135, PMI $281/month
• 10% down ($35,000): Loan $315,000, Monthly P&I $1,991, PMI $210/month
• 20% down ($70,000): Loan $280,000, Monthly P&I $1,769, No PMI
• 30% down ($105,000): Loan $245,000, Monthly P&I $1,548, No PMI

The 20% down payment saves you $366/month compared to 3.5% down (P&I + PMI), and you'll pay $131,000 less in total interest over 30 years.

Break-Even Analysis

The break-even point is when the savings from a higher down payment (lower payment + no PMI) exceed the opportunity cost of not investing that money elsewhere:

• Formula: Break-even = Extra Down Payment ÷ Monthly Savings
• Example: Extra $57,750 (20% vs 3.5%) ÷ $366/month = 158 months (13 years)
• Consider: If you plan to stay longer than break-even, higher down payment wins
• Opportunity cost: If you could earn 7% investing, factor that into the calculation
• Psychological benefit: More equity = more financial security

Using This Calculator

Follow these steps to find your optimal down payment:

• Step 1: Enter the home purchase price
• Step 2: Adjust the down payment percentage or amount
• Step 3: Enter your expected interest rate and loan term
• Step 4: Select your loan type (Conventional, FHA, VA, Jumbo)
• Step 5: Review the comparison table to see different scenarios
• Step 6: Check the break-even analysis to see when higher down payment pays off
• Step 7: Consider your financial goals and how long you plan to stay