How much down payment do I really need?
It depends on the loan type. Conventional loans allow as little as 3% down for first-time buyers, FHA loans need 3.5%, VA and USDA loans can be 0%, and the traditional 20% threshold eliminates PMI on conventional loans. Most US buyers actually put down 6–15%, not 20%. This calculator's comparison table shows the trade-offs at each level.
Do I need 20% down to buy a home?
No — that's a common myth. Most loan programs allow much less. The benefit of 20% is avoiding PMI and qualifying for the best rates. The downside of waiting to hit 20% is paying years of rent and missing potential home appreciation. For many buyers, 5–10% down with PMI works out better than waiting.
What is the total cash needed to close on a home?
Plan for your down payment plus closing costs (typically 2–5% of the home price in the US). On a $400,000 home with 20% down and 3% closing, that's $80,000 + $12,000 = $92,000 total. Add a small reserve for moving costs, immediate repairs, and a few months of mortgage payments as emergency cash.
How long should it take to save a down payment?
It varies wildly. A US first-time buyer earning the median income and saving 10% of pre-tax pay typically takes 5–10 years to save 20% on a median-priced home, less for cheaper homes or lower-down-payment loans. This calculator shows your exact timeline based on your current savings, monthly contributions, and APY.
Where should I park my down payment savings?
Somewhere safe and accessible. High-yield savings accounts, money-market funds, and short-term CDs are the standard choices — they preserve principal and earn modest interest. Avoid putting your down payment in the stock market if you'll need it within 3 years; the volatility risk outweighs the higher expected return.
What is PMI and how much does it cost?
Private Mortgage Insurance protects the lender if you default. It applies to conventional loans with less than 20% down and typically costs 0.3–1.5% of the loan amount per year, paid monthly. On a $320,000 loan at 0.7%, that's about $187/month. PMI ends automatically at 78% loan-to-value or can be requested at 80% LTV.
Can I use gift money for a down payment?
Yes, most loan programs allow gifted funds from family. You'll need a signed gift letter stating the money is not a loan, and lenders may require documentation showing the source. Some programs require you to contribute at least a small amount of your own funds. Check your loan type's specific rules.
Can I borrow from my 401(k) for a down payment?
In the US, most 401(k) plans allow loans up to 50% of your balance or $50,000, whichever is less. You repay yourself with interest, typically over 5 years. Risk: if you leave your job, the loan may become due quickly. Some plans also allow hardship withdrawals for a home, but those incur taxes and penalties.
What are closing costs?
Closing costs are the fees paid to finalize a mortgage and home purchase, typically 2–5% of the home price. They include lender fees, title insurance, appraisal, attorney fees (where applicable), recording fees, and prepaid items like property taxes and homeowner's insurance. They're separate from your down payment.
Should I put more down to get a lower payment?
It reduces your monthly payment and total interest, but it also ties up cash that could be invested elsewhere. Compare your mortgage rate to what your savings could earn invested. If your mortgage is 6.5% and you'd earn 7%+ in long-term investments, smaller down payment and investing the difference may win — but it requires discipline.
What down payment assistance programs exist?
Many US states, cities, and lenders offer grants or forgivable loans for first-time buyers, particularly for moderate-income households, teachers, healthcare workers, and veterans. Search your state's Housing Finance Agency website for current programs. Some programs cover only closing costs; others provide several thousand toward the down payment.
How accurate is this down payment calculator?
The math is precise for your inputs. Down payment calculations are exact. The savings timeline uses the standard future-value-of-annuity formula assuming constant APY and monthly contributions. Real APYs fluctuate, you may save more in some months than others, and closing costs vary by lender, so treat the timeline as a strong estimate rather than a guaranteed date.
