Down Payment Calculator
See how down payment size affects PMI, loan-to-value, and your monthly mortgage. Slide between 5-50% and compare costs side by side.
See how different down payment percentages affect your mortgage loan amount, monthly payment, and total interest cost. Slide between 5% and 50% to instantly compare scenarios, with a full comparison table showing 8 common down payment levels side by side.
For informational purposes only. Not financial advice. Calculations are estimates and may not reflect your exact situation. Consult a qualified financial adviser for personalised guidance.
About Down Payment Calculator
How Does a Down Payment Affect Your Mortgage?
The down payment directly reduces the amount you borrow. A larger down payment means a smaller loan, lower monthly payments, and significantly less interest over the life of the mortgage.
Worked example: $350,000 home, 30-year mortgage at 6.5% APR:
| Down Payment | Amount | Loan Amount | Monthly Payment | Total Interest |
|---|---|---|---|---|
| 5% | $17,500 | $332,500 | $2,102 | $424,220 |
| 10% | $35,000 | $315,000 | $1,991 | $402,000 |
| 15% | $52,500 | $297,500 | $1,881 | $379,780 |
| 20% | $70,000 | $280,000 | $1,770 | $357,560 |
| 25% | $87,500 | $262,500 | $1,660 | $335,340 |
| 30% | $105,000 | $245,000 | $1,549 | $313,120 |
Going from 5% down to 20% down saves $332/month and $66,660 in total interest. That is the equivalent of buying a car with the interest savings alone.
The 20% Down Payment Threshold
In the US, 20% is a critical threshold because of Private Mortgage Insurance (PMI). If you put down less than 20%, most conventional lenders require PMI, which typically costs 0.5-1% of the loan amount per year.
PMI cost example: $300,000 loan with 10% down ($270,000 financed):
- PMI at 0.7% of loan amount: $270,000 x 0.007 = $1,890/year ($157.50/month)
- PMI continues until you reach 20% equity (when the loan balance drops to $240,000)
- That takes about 6-8 years on a standard 30-year mortgage
- Total PMI paid: roughly $11,000-15,000
In the UK, the equivalent is higher interest rates for high loan-to-value (LTV) mortgages. A 90% LTV mortgage typically charges 0.5-1% more than a 75% LTV mortgage.
How Much Down Payment Do You Need by Loan Type?
| Loan Type | Minimum Down | Recommended Down | Notes |
|---|---|---|---|
| Conventional (US) | 3-5% | 20% | PMI required below 20% |
| FHA (US) | 3.5% | 10% | MIP required for loan life at 3.5% down |
| VA (US) | 0% | 5-10% | No PMI; funding fee reduced with down payment |
| USDA (US) | 0% | 0% | Rural areas only; guarantee fee applies |
| UK mortgage (standard) | 5% | 15-25% | Better rates at 75% LTV and below |
| UK mortgage (Help to Buy) | 5% | 5% | Government equity loan for new builds (ended 2023) |
| Auto loan | 0% | 20% (new), 10% (used) | Avoid being upside-down on depreciation |
Down Payment vs Investing the Difference
Putting more money down guarantees a return equal to your mortgage rate (because you borrow less and pay less interest). But investing that money in the stock market might earn more. The comparison depends on your mortgage rate and expected investment returns.
Example: You have $100,000 available. Should you put $70,000 down (20%) or $35,000 (10%) and invest the $35,000 difference?
| Scenario | 20% Down | 10% Down + Invest |
|---|---|---|
| Down payment | $70,000 | $35,000 |
| Loan amount | $280,000 | $315,000 |
| Monthly payment | $1,770 | $1,991 + ~$130 PMI |
| Extra interest over 30 years | - | $44,460 |
| PMI (est. 6 years) | $0 | ~$12,000 |
| $35,000 invested at 7% for 30 years | $0 | $266,385 |
| Net advantage | - | +$209,925 |
In this example, investing the difference wins by a wide margin because the expected stock market return (7%) exceeds the mortgage rate (6.5%) and the investment compounds for 30 years. However, stock returns are not guaranteed and include years of losses. The "right" answer depends on your risk tolerance, financial stability, and whether you have other debts at higher rates.
How to Save for a Down Payment
Saving $35,000-70,000 takes time. Realistic timelines for common home prices:
| Home Price | 20% Down | Saving $1,000/month | Saving $2,000/month |
|---|---|---|---|
| $200,000 | $40,000 | 3.3 years | 1.7 years |
| $300,000 | $60,000 | 5.0 years | 2.5 years |
| $400,000 | $80,000 | 6.7 years | 3.3 years |
| $500,000 | $100,000 | 8.3 years | 4.2 years |
These assume a standard savings account. A high-yield savings account (4-5%) or a Stocks and Shares ISA (for longer timelines) can shorten the period by 10-20%.
Common Down Payment Mistakes
- Draining all savings: Keep 3-6 months of expenses as an emergency fund separate from your down payment. Homeownership brings unexpected costs (broken boiler, roof leak, appliance failure).
- Forgetting closing costs: Budget an additional 2-5% of the purchase price for closing costs (appraisal, inspection, solicitor fees, title insurance). On a $350,000 home, that is $7,000-17,500 on top of the down payment.
- Waiting too long for 20%: In a market where property values are rising 5% per year, waiting 3 extra years to reach 20% means paying for a more expensive house. Sometimes 10-15% down now beats 20% down later.
- Ignoring gift rules: Many loan programs allow down payment gifts from family. In the US, FHA and conventional loans permit gifts for the full down payment if properly documented. Check the rules for your loan type.
Once you know your target, the savings goal calculator figures out how much to set aside each month. For a broader view of what you can afford, the mortgage affordability calculator factors in income, debts, and interest rates. To compare the full cost of buying vs renting, see the buy vs rent calculator.
UK Lifetime ISA for First-Time Buyers
The Lifetime ISA (LISA) is one of the best savings vehicles for UK first-time buyers aged 18-39. Here is how it works:
- You can save up to £4,000 per year into a LISA
- The government adds a 25% bonus on your contributions - that is up to £1,000 free money per year
- You can open a LISA from age 18 and contribute until you turn 50
- The property must cost £450,000 or less
- You must have had the LISA open for at least 12 months before using it
- Withdrawing for anything other than a first home or retirement (after age 60) incurs a 25% penalty, which actually means you lose more than the bonus
Example: You save £4,000/year for 5 years into a Cash LISA earning 4% interest:
| Year | Your Contribution | Government Bonus | Running Total (with interest) |
|---|---|---|---|
| 1 | £4,000 | £1,000 | £5,200 |
| 2 | £4,000 | £1,000 | £10,608 |
| 3 | £4,000 | £1,000 | £16,232 |
| 4 | £4,000 | £1,000 | £22,081 |
| 5 | £4,000 | £1,000 | £28,164 |
After 5 years, you have contributed £20,000, received £5,000 in government bonuses, and earned about £3,164 in interest. That is £28,164 for a first home deposit from £20,000 of your own money. The LISA counts towards your £20,000 annual ISA allowance. Use the ISA calculator to model long-term LISA growth with different contribution levels.
UK Shared Ownership
Shared Ownership lets you buy a share of a property (between 25% and 75%) and pay rent on the rest. It is run by housing associations and is aimed at people who cannot afford a full purchase.
- Who qualifies: Household income must be £80,000 or less (£90,000 in London). First-time buyers, previous homeowners who cannot afford to buy now, and existing shared owners can apply.
- Deposit required: 5-10% of your share, not the full property value. On a £300,000 home where you buy a 25% share (£75,000), you need £3,750-£7,500 as a deposit.
- Staircasing: You can buy additional shares over time until you own 100%. Each staircasing step requires a new valuation and potentially higher stamp duty.
- Rent: You pay rent on the housing association's share, typically 2.75% of their share's value per year. On the £225,000 they retain, that is about £516/month.
The total monthly cost (mortgage + rent + service charge) can actually be higher than a standard mortgage on a cheaper property, so run the numbers carefully. Shared Ownership works best in expensive areas where the only alternative is renting indefinitely.
US Down Payment Assistance Programs
Most US states offer down payment assistance (DPA) to first-time buyers. These programs vary significantly by state, but common structures include:
| Program Type | How It Works | Repayment |
|---|---|---|
| Forgivable second mortgage | Lender provides 3-5% of purchase price as a silent second loan | Forgiven after 5-10 years if you stay in the home |
| Deferred-payment loan | 0% interest loan for the down payment | Due when you sell, refinance, or pay off the first mortgage |
| Grant | Outright cash gift, typically $5,000-$15,000 | No repayment required |
| Matched savings (IDA) | You save into a special account, the program matches your deposits 2:1 or 3:1 | No repayment, but must complete homebuyer education |
Examples: California's CalHFA MyHome program offers up to 3.5% of the purchase price as a deferred loan. Texas has the My First Texas Home program with up to 5% DPA. New York's SONYMA provides up to $15,000 for first-time buyers. Check your state's housing finance agency website for current programs. The US Department of Housing and Urban Development (HUD) maintains a list at hud.gov.
Gifted Deposit Rules
Many first-time buyers receive help from family for their deposit. The rules around gifted deposits differ between the UK and US:
| Requirement | UK | US |
|---|---|---|
| Who can gift? | Usually immediate family only (parents, grandparents, siblings) | Family members, employer, or charitable organisation |
| Documentation | Gifted deposit letter confirming it is not a loan, plus donor's ID and bank statements | Gift letter stating amount, relationship, and confirming no repayment expected |
| Source of funds | Lender will require proof of where the money came from (anti-money laundering rules) | Lender may request donor's bank statements showing the transfer |
| Tax implications | No immediate tax. Falls under IHT rules if donor dies within 7 years (£325K nil-rate band) | Gift tax annual exclusion: $19,000 per person (2025). Above this, donor files Form 709 but no tax is due until lifetime exclusion ($13.99M) is used |
| FHA rules | N/A | 100% of down payment can be gifted for FHA loans. Conventional loans with less than 20% down require the buyer to contribute at least 5% from own funds (varies by lender) |
In the UK, the biggest pitfall is failing to declare the gift properly. Lenders need to see that the money is genuinely a gift and not a disguised loan that creates a hidden debt. Undeclared gifts can lead to mortgage fraud charges. Get the paperwork right from the start.
Average First-Time Buyer Deposit by Country
| Country | Average Deposit | Average House Price (FTB) | Deposit as % of Price | Source |
|---|---|---|---|---|
| UK | £53,400 | £243,000 | 22% | Halifax FTB Report 2024 |
| UK (London) | £112,000 | £445,000 | 25% | Halifax FTB Report 2024 |
| US | $26,700 | $332,000 | 8% | NAR Profile of Home Buyers 2024 |
| Canada | C$67,000 | C$460,000 | 15% | CMHC Housing Market Report 2024 |
| Australia | A$114,000 | A$585,000 | 19% | ABS Housing Data 2024 |
US first-time buyers put down far less on average (8%) compared to the UK (22%). This is partly because US government-backed loans (FHA, VA, USDA) accept very low or zero deposits, while UK lenders typically require at least 5% and offer much better rates at 15-25% LTV. The stamp duty calculator shows what tax you will owe on top of the deposit when buying in England or Wales.
Once you know your target, the savings goal calculator figures out how much to set aside each month. For a broader view of what you can afford, the mortgage affordability calculator factors in income, debts, and interest rates. To compare the full cost of buying vs renting, see the buy vs rent calculator.
Sources
- GOV.UK - Lifetime ISA
- GOV.UK - Shared Ownership Scheme
- CFPB - Private Mortgage Insurance (PMI)
- HUD - FHA Loan Requirements
- IRS - Gift Tax FAQs
- NAR - Profile of Home Buyers and Sellers
- Halifax - First-Time Buyer Report
All calculations run in your browser. No data is stored or transmitted.
Frequently Asked Questions
How much down payment do I need for a house?
The typical down payment ranges from 5% to 20% of the property price. While 20% is often recommended to avoid private mortgage insurance (PMI), many loan programs accept as little as 3-5%. A larger down payment means a smaller loan and lower monthly payments.
How does down payment affect monthly payments?
A bigger down payment directly reduces the loan amount, which lowers both the monthly payment and total interest paid. The comparison table shows exactly how each percentage affects your monthly cost, making it easy to find the right balance.
What is the advantage of putting 20% down?
Putting 20% down typically lets you avoid private mortgage insurance (PMI), which can add 0.5-1% of the loan amount per year. It also means lower monthly payments, less total interest, and a smaller loan-to-value ratio which lenders prefer.
Can I use this for car down payments too?
Yes. While it is designed with property purchases in mind, the math works for any large purchase where you put money down and finance the rest. For car-specific features like trade-in value and sales tax, try the Auto Loan Calculator.
Should I put all my savings into a down payment?
Generally, you should keep an emergency fund of 3-6 months of expenses separate from your down payment. Putting everything into a down payment leaves you vulnerable to unexpected costs. Use this calculator alongside a budget planner to find a comfortable balance.
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