Down Payment Calculator

How Much Down Payment Do You Actually Need?

The 20% down payment is deeply ingrained in American homebuying culture, but it's a myth that you need 20% to buy a house. According to the National Association of Realtors, the median down payment for first-time buyers is just 6–8%, and for repeat buyers around 17%. Multiple loan programs exist for lower down payments:

*FHA mortgage insurance premium (MIP) stays for the life of the loan if you put down less than 10%. With 10%+ down, MIP drops off after 11 years.

The Real Cost: Down Payment + Closing Costs

Many first-time buyers focus on the down payment and forget about closing costs, which typically add 2–5% of the purchase price. On a $350,000 home, that's $7,000–$17,500 on top of your down payment. Closing costs include loan origination fees, appraisal, title insurance, attorney fees, prepaid taxes, and homeowners insurance. You also need reserves — most lenders want 2–6 months of mortgage payments in the bank after closing.

Our calculator includes closing costs in the "total cash needed" figure so you see the full picture, not just the down payment.

PMI: The Cost of Putting Down Less Than 20%

Private Mortgage Insurance (PMI) protects the lender if you default. It typically costs 0.5–1.5% of the loan amount annually, or $75–$225/month on a $300,000 loan. The good news: conventional PMI automatically drops off when you reach 20% equity (based on the original purchase price), and you can request removal at 80% loan-to-value.

For many buyers, paying PMI while buying sooner makes more financial sense than waiting years to save 20% — especially in appreciating markets where home prices rise faster than you can save.

Down Payment Savings Strategies

• High-yield savings account — Park your down payment fund in an HYSA earning 4–5% APY. Safe, liquid, and FDIC insured.
• Automate transfers — Set up automatic weekly or biweekly transfers on payday so saving happens before spending.
• Down payment assistance (DPA) — Over 2,000 programs exist nationwide, offering grants, forgivable loans, or matched savings. Check your state housing finance agency.
• Gift funds — Family members can gift money for down payments. FHA, VA, and conventional loans all allow gift funds with proper documentation.

Should You Wait for 20% or Buy Now?

This depends on your local market, interest rates, and how long it would take to save the difference. If home prices are rising 5% annually and saving from 5% to 20% would take you 3 extra years, the home could cost $55,000 more by then. In that scenario, buying now with PMI and refinancing later to remove it often makes more financial sense. Our comparison table shows the trade-offs at each down payment level.

Frequently Asked Questions

Can I use retirement funds for a down payment?

First-time homebuyers can withdraw up to $10,000 from a Traditional IRA without the 10% early withdrawal penalty (income tax still applies). Roth IRA contributions (not earnings) can be withdrawn at any time penalty-free. Some 401(k) plans allow hardship withdrawals or loans, but using retirement funds for a home purchase delays your retirement savings growth.

Do first-time buyer programs still require a down payment?

Most do, but some down payment assistance programs cover it with grants or forgivable loans. VA loans and USDA loans require zero down payment. FHA loans need just 3.5%. Many state housing finance agencies offer 3-5% DPA grants specifically for first-time buyers who meet income limits.