How Much Down Payment Do You Need?
The down payment calculator helps you plan one of the largest cash outlays in homeownership. Knowing your target amount — and how much you need to save each month to reach it — is the foundation of any serious homebuying plan. The answer depends on the home price, your chosen loan program, and your timeline.
Minimum Down Payments by Loan Type
Different loan programs have different minimums. Conventional loans require as little as 3% down (for first-time buyers through Fannie Mae's HomeReady or Freddie Mac's Home Possible). FHA loans require 3.5% with a 580+ credit score. VA loans (military veterans) and USDA loans (rural areas) require 0% down for eligible borrowers. Jumbo loans typically require 10–20%.
The 20% Threshold and PMI
Putting down 20% is the traditional target because it eliminates Private Mortgage Insurance (PMI). PMI protects the lender if you default and costs 0.5%–1.5% of the loan amount annually — roughly $100–$300/month on a $300,000 loan. Once your equity reaches 20%, you can request PMI cancellation (it automatically cancels at 22% equity on conventional loans).
The Tradeoff: Large vs. Small Down Payment
A larger down payment lowers your monthly payment, eliminates PMI, and may qualify you for a better rate — but it ties up capital. A smaller down payment preserves cash for closing costs, moving expenses, furnishings, and an emergency fund. Many financial planners suggest 10–15% as a sweet spot: avoids heavy PMI costs while keeping cash reserves intact.
Down Payment Assistance Programs
If saving 20% seems out of reach, explore assistance options. Many states and municipalities offer down payment assistance grants or forgivable second loans for first-time homebuyers earning under area median income. Some employers also offer housing benefits. These programs can cover 3–10% of the purchase price, making homeownership achievable years earlier.
Closing Costs: The Hidden Down Payment
Don't forget closing costs — typically 2–5% of the purchase price. On a $350,000 home, that's $7,000–$17,500 due at closing in addition to the down payment. Budget for both when setting your savings goal. Some sellers will negotiate to cover partial closing costs, but this is less common in competitive markets.