Do I need 20% down to buy a home?

No. FHA loans require as little as 3.5% down. Conventional loans can start at 3-5%. VA loans require 0% for eligible veterans. However, less than 20% down typically requires PMI, adding to your monthly cost.

What is private mortgage insurance (PMI)?

PMI protects the lender if you default on a loan with less than 20% equity. It typically costs 0.3-1.5% of the loan amount annually. PMI is removed once you reach 20% equity in your home.

Where should I keep my down payment savings?

Use a high-yield savings account for safety and liquidity. Avoid investing down payment funds in stocks if you plan to buy within 2-3 years, as market volatility could reduce your savings when you need them.

Can I use gift money for a down payment?

Yes, most loan programs allow gift funds from family members. You will need a gift letter stating the money does not need to be repaid. FHA, VA, and conventional loans all accept gifts with proper documentation.

Does a larger down payment get me a better interest rate?

Generally yes. Lenders view larger down payments as lower risk, which can qualify you for better rates. The biggest rate improvement usually comes at the 20% threshold when PMI is no longer required.

Down Payment Calculator

Find out exactly how much you need to save — and what your loan will look like.

Down Payment Calculator

Calculate how much you need for a down payment

Find the down payment for a home or vehicle

Home Price ($)

Down Payment (%)

Formula

Down Payment = Price x Percentage

What Is a Down Payment?

A down payment is the upfront cash you pay toward a home purchase, expressed as a percentage of the purchase price. Common benchmarks are 3% (some conventional loans), 3.5% (FHA loans), 5%, 10%, and the classic 20%. The higher the percentage, the less you borrow — which means lower monthly payments and less interest paid over the life of the loan.

Putting down 20% is the magic number that lets you avoid Private Mortgage Insurance (PMI), a monthly fee lenders charge when your loan-to-value ratio exceeds 80%. That said, tying up a large chunk of cash in a down payment has a tradeoff: you'll have less in reserve for repairs, emergencies, or other investments. The right balance depends on your savings, income stability, and how long you plan to stay in the home.

How to Use This Calculator

1Enter the home purchase price in the field provided.
2Enter your desired down payment percentage — or switch to dollar mode and type the exact amount you have saved.
3Instantly see the down payment dollar amount, the resulting loan amount, and your LTV ratio.
4Check whether PMI applies — if your LTV is above 80%, the calculator estimates your monthly PMI cost range.

The Formulas Behind the Numbers

Down Payment Amount = Home Price × (Down Payment % / 100)
Loan Amount = Home Price − Down Payment
LTV Ratio = (Loan Amount / Home Price) × 100%

PMI required when LTV > 80% (less than 20% down)
Estimated PMI = Loan Amount × 0.5% to 1.5% per year

LTV = Loan-to-Value ratio. PMI cost varies by lender, your credit score, and your exact LTV — 0.5%–1.5% per year is a widely used estimate range.

Worked Examples

Example 1: $350,000 Home — 20% Down

Down payment: $350,000 × 20% = $70,000. Loan amount: $350,000 − $70,000 = $280,000. LTV ratio: ($280,000 / $350,000) × 100 = 80.00%. Result: LTV is exactly 80%, so no PMI is required. This is the sweet spot most buyers aim for.

Example 2: $280,000 Home — 10% Down

Down payment: $280,000 × 10% = $28,000. Loan amount: $280,000 − $28,000 = $252,000. LTV ratio: ($252,000 / $280,000) × 100 = 90.00%. PMI applies. Estimated annual PMI: $1,260–$3,780 (0.5%–1.5% of $252,000), or roughly $105–$315 per month.

Example 3: $450,000 Home — 5% Down

Down payment: $450,000 × 5% = $22,500. Loan amount: $450,000 − $22,500 = $427,500. LTV ratio: ($427,500 / $450,000) × 100 = 95.00%. PMI applies. Estimated annual PMI: $2,138–$6,413 (0.5%–1.5% of $427,500), or roughly $178–$534 per month.

Frequently Asked Questions

How much down payment do I really need?▾

It depends on the loan type. Conventional loans can go as low as 3% down for qualified buyers. FHA loans require 3.5% with a credit score of 580+. VA and USDA loans may require zero down for eligible borrowers. The minimum to avoid PMI on a conventional loan is 20%. A larger down payment also strengthens your offer in competitive markets.

Can I avoid PMI without putting 20% down?▾

Yes — a few ways. Some lenders offer lender-paid PMI (LPMI), where they cover the PMI cost in exchange for a slightly higher interest rate. You can also use a piggyback loan (80/10/10 structure), where a second mortgage covers part of the gap so your first mortgage stays at 80% LTV. Once you build 20% equity through payments or appreciation, you can request PMI cancellation.

What is an FHA loan and how does the 3.5% down work?▾

FHA loans are insured by the Federal Housing Administration and designed for buyers with lower credit scores or limited savings. You can put down just 3.5% with a credit score of 580 or higher (10% if your score is 500–579). The catch: FHA loans include both an upfront mortgage insurance premium (1.75% of the loan) and an annual MIP for the life of the loan in most cases — unlike conventional PMI, which you can eventually remove.

How does the down payment size affect my monthly payment?▾

A larger down payment directly reduces your loan amount, which lowers the principal and interest portion of your payment. It also lowers or eliminates PMI. For example, on a $350,000 home at a 7% rate over 30 years: a 10% down payment ($315,000 loan) means roughly $2,096/month in P&I, while a 20% down payment ($280,000 loan) drops that to about $1,863/month — a savings of $233/month, plus no PMI.

How long should I plan to save for a down payment?▾

A common approach: target saving 20–25% of your goal amount per year. On a $50,000 down payment goal, saving $1,000/month gets you there in just over 4 years. High-yield savings accounts and CD ladders can help your savings grow while you wait. Many buyers also look at down payment assistance programs (DPA) offered by state and local housing agencies, which can provide grants or low-interest second loans.