How to use the down payment calculator
The Cash to close tab adds up what you need to buy, and compares five common down payment levels side by side. The Savings plan tab shows how long it takes to save that amount.
The example is a $400,000 home bought with 10% down and closing costs of 3% of the price.
- Home price and down payment. Enter the down payment as a percentage of the price. The loan is the price minus the down payment.
- Closing costs. Enter them as a percentage of the price. Your lender’s Loan Estimate gives the real figure, usually within a few days of applying; until then, 2% to 5% is a reasonable range.
- Credits and concessions. If the seller has agreed to pay part of your costs, or the lender offers a credit, enter the dollar amount. Credits can only offset closing costs, so the calculator never lets them reduce the down payment.
- Moving costs and reserves. Optional, but worth filling in. Moving is not paid at closing, and reserves are money you keep, yet both have to come from the same savings.
- Rate and term. Used only for the principal and interest column in the comparison table.
How the cash is calculated
Loan = Price − Down payment
Cash at closing = Down payment + Closing costs − Credits
Total cash to have ready = Cash at closing + Moving costs + ReservesCredits are capped at the closing costs. Loan-to-value (LTV) is the loan divided by the price; above 80%, conventional lenders usually require private mortgage insurance (PMI).
The savings plan grows your current savings and each monthly deposit at the account’s APY, converted to a monthly rate:
A worked example
A $400,000 home with 10% down needs a $40,000 down payment and a loan of $360,000. Closing costs at 3% add $12,000, so you need $52,000 at the closing table.
Add $2,500 for the move and $5,000 kept as a reserve, and the total cash to have ready is $59,500.
The loan-to-value ratio is 90.0%, so a conventional lender would charge PMI. Principal and interest at 6.5% come to $2,275.44 a month, before tax, insurance and PMI.
Closing costs are 23% of the cash due at closing in this example. Buyers who save only for the down payment are often surprised by how large that second number is.
Comparing down payments from 3% to 20%
| Down payment | Cash at closing | Principal & interest |
|---|---|---|
| 3% | $24,000 | $2,452.42 |
| 10% | $52,000 | $2,275.44 |
| 20% | $92,000 | $2,022.62 |
The table under the calculator adds 3.5% and 5% and the LTV for each option. Three points stand out.
Closing costs barely change. They depend on the price and the lender, not on the down payment, so the cash gap between options is almost entirely the down payment itself.
PMI changes the real gap. The payments above are principal and interest only. Below 20% down you also pay mortgage insurance, typically somewhere around 0.3% to 1.5% of the loan a year depending on credit and LTV. It ends on a conventional loan once the balance reaches 78% of the original price, which the mortgage calculator dates for you.
Cash has a value too. Money paid into the house is hard to get back without selling or borrowing against it. A buyer who empties their savings to reach 20% has nothing left for a broken furnace in the first winter. A smaller down payment with a solid reserve can be the safer position, even if it costs more each month.
Closing costs and how to reduce them
Typical closing costs include the lender’s origination fee, appraisal, credit report, title search and title insurance, recording fees and transfer taxes, plus prepaid items: the first year of homeowners insurance, some months of property tax for the escrow account and interest until the first payment.
| Closing costs | Cash at closing |
|---|---|
| 2% of the price | $48,000 |
| 3% of the price | $52,000 |
| 5% of the price | $60,000 |
The main levers are seller concessions, negotiated as part of the offer, and lender credits, which you pay for through a slightly higher rate. A $6,000 credit in the example brings the cash at closing down to $46,000. Shopping two or three lenders and comparing the fee sections of their Loan Estimates is usually worth the effort, since lender fees vary more than most buyers expect.
Planning the savings
The Savings plan tab starts from the total you need. In the example, $25,000 is already saved toward a $60,000 target, and $1,500 goes in each month at 4% APY.
The remaining $35,000 takes 22 months. Interest adds $3,023 along the way, enough to finish sooner than the 24 months it would take in an account paying nothing. Raising the monthly saving to $2,000 shortens the wait to 17 months.
Over a horizon of a few years, the monthly saving matters far more than the interest rate. A high-yield savings account, a money market fund or short CDs suit this money; stock market investments can fall just when you need the cash.
What this calculator does not include
- Mortgage insurance and escrow. PMI, FHA premiums, property tax and homeowners insurance are not in the principal and interest figures.
- Earnest money. The deposit you pay when your offer is accepted is credited at closing, so it reduces the cash due that day but not the total you need.
- Program-specific rules. VA funding fees, USDA guarantee fees and down payment assistance programs change both the cash and the loan.
- Taxes in your state. Transfer taxes and recording fees vary widely, which is the main reason closing costs range from about 2% to 5%.
Use the result to set a savings target, then replace the estimates with the figures from your Loan Estimate once you apply.