How Much Down Payment Do You Need?
A down payment is the upfront cash you contribute when buying a home, expressed as a percentage of the purchase price. A down payment calculator helps you see how your down payment affects the loan amount, the monthly payment, and the loan-to-value ratio. The right amount depends on your budget and the type of mortgage you qualify for.
Many buyers assume they need 20 percent down, but that is not always required. Conventional loans can start at 3 percent for qualified buyers, FHA loans start at 3.5 percent, and VA loans may require no down payment at all for eligible veterans. A smaller down payment makes buying sooner possible, but it usually comes with a higher monthly payment and mortgage insurance.
Why 20 Percent Down Is a Popular Target
The main benefit of a 20 percent down payment is avoiding private mortgage insurance, or PMI. PMI protects the lender, not you, and it can add a meaningful amount to your monthly payment. Reaching 20 percent equity also gives you a smaller loan and more equity from day one.
The trade-off is time. Saving 20 percent of a home price can take years, especially while you are also paying rent. Some buyers choose a lower down payment to lock in a home and build equity sooner, then work to remove PMI once they reach 20 percent through payments and appreciation.
Down Payment Assistance and Savings Strategy
Many state and local programs offer down payment assistance for first-time buyers. These programs can provide grants or forgivable loans that reduce the cash you need upfront. A steady savings plan makes the goal more achievable, and our calculator can estimate how many months it will take to reach 20 percent at your current saving rate.
For more home-buying math, try our mortgage calculator and our home affordability calculator.