How do I calculate a down payment?
Multiply the home price by your desired down payment percentage. For example, a 20% down payment on a $400,000 home is $400,000 × 0.20 = $80,000. The remaining $320,000 becomes your mortgage loan amount. See also our Mortgage Payoff Calculator.
How much should I put down on a house?
It depends on your financial situation and loan type. A higher down payment lowers your monthly payment and reduces interest paid over the life of the loan. However, putting down less preserves cash for emergencies, renovations, or investments. Most first-time buyers put down between 3% and 10%.
Why is a 20% down payment often recommended?
A 20% down payment lets you avoid Private Mortgage Insurance (PMI), which typically adds 0.5%–1.5% of the loan amount per year to your costs. It also results in a smaller loan, lower monthly payments, and you immediately have significant equity in your home.
What is the minimum down payment for a home?
Minimum requirements vary by loan type. Conventional loans typically require as little as 3% for first-time buyers. FHA loans require 3.5% with a credit score of 580+. VA and USDA loans may require 0% down for qualified borrowers. Investment properties generally require 15%–25%. You might also find our find Total Interest Saved with Mortgage Overpayment Calculator useful.
What is PMI and when do I need it?
Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20%. It protects the lender if you default. PMI typically costs 0.5%–1.5% of the loan amount annually and can be removed once you reach 20% equity in your home.
Does the minimum down payment differ for investment properties?
Yes. Investment properties have stricter requirements — most lenders require at least 15%–25% down. Second homes typically require a minimum of 10%. Primary residences have the most flexible options, with some loans starting as low as 3%.
How does my down payment affect my monthly mortgage payment?
A larger down payment reduces the loan principal, which directly lowers your monthly payment and total interest paid. For example, on a $400,000 home at 6.5%, a 10% down payment yields a significantly higher monthly payment than a 20% down payment because the loan balance is $40,000 higher.
Can I use gift funds for a down payment?
Yes, many loan programs allow gift funds from family members, though documentation is usually required showing the money is a gift and not a loan. FHA, conventional, and VA loans each have specific rules about how gift funds can be used and who can provide them.