Financial Analyst specializing in Residential Real Estate and Mortgage Markets.
Use this interactive tool to quickly calculate the required down payment amount, the down payment percentage, or the maximum home price you can afford. Simply fill in any two fields and leave the third one blank to solve for the missing value.
Mortgage Down Payment Calculator
Leave this blank to solve for the maximum price.
Leave this blank to solve for the percentage.
Leave this blank to solve for the required amount.
Mortgage Down Payment Calculator Formula
The down payment calculation is based on the simple relationship between the total purchase price and the desired percentage.
Purchase Price = Down Payment Amount / (Down Payment Percentage / 100)
Down Payment Percentage = (Down Payment Amount / Purchase Price) × 100
Variables Explained
Here is a breakdown of the fields used in the calculator:
- Home Purchase Price: The total agreed-upon cost of the property before any fees or costs.
- Down Payment Percentage: The portion of the home price, expressed as a percentage, that you plan to pay upfront in cash.
- Down Payment Amount: The actual dollar amount paid upfront, which reduces the total amount borrowed for the mortgage.
What is a Mortgage Down Payment?
A mortgage down payment is the initial amount of money you pay toward the purchase of a home. It is expressed as a percentage of the home’s total price. For example, on a $400,000 home, a 20% down payment is $80,000. This is a critical component of homeownership, as the larger the down payment, the less money you have to borrow, which typically results in lower monthly payments and reduced interest expense over the life of the loan.
While many lenders prefer a 20% down payment to avoid requiring Private Mortgage Insurance (PMI), programs exist that allow for down payments as low as 3.5% or even 0% (for specific government-backed loans). The amount you can afford directly impacts your monthly budget, your interest rate, and your financial standing in the eyes of mortgage underwriters.
How to Calculate Down Payment (Example)
- Determine the Purchase Price: Start with a hypothetical home price. For this example, assume a Purchase Price of $350,000.
- Set the Desired Percentage: A common goal is 10%. Convert this to a decimal: 10 / 100 = 0.10.
- Multiply to Find the Amount: Multiply the price by the decimal percentage: $350,000 × 0.10 = $35,000.
- Result: The required Down Payment Amount is $35,000. The remaining balance ($315,000) is the principal mortgage loan amount.
Frequently Asked Questions (FAQ)
A 20% down payment is ideal because it typically allows you to avoid paying Private Mortgage Insurance (PMI), a monthly fee that protects the lender if you default on your loan. Eliminating PMI saves money and lowers your monthly housing expense.
Q: What is the minimum down payment I can make?The minimum down payment varies based on the loan type. FHA loans generally require 3.5%, and conventional loans often allow as low as 3%. VA and USDA loans offer 0% down payment options for qualifying borrowers.
Q: Does the down payment include closing costs?No. The down payment is solely the percentage of the home’s purchase price paid upfront. Closing costs are separate fees (e.g., appraisal, title insurance, loan origination) that typically range from 2% to 5% of the loan amount and are paid in addition to the down payment.
Q: Can I use gifts for my down payment?Yes, many mortgage programs allow the use of gift funds from relatives or non-profit organizations for the down payment. Lenders will require a gift letter to verify that the funds are not a loan.
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