How to use the Down Payment Calculator
- Enter the home price you are targeting.
- Choose a down payment percentage — 20% avoids mortgage insurance, but 3%–5% programmes exist.
- Enter what you have saved so far toward the purchase.
- Add your monthly saving amount and the interest your savings earn.
- Read the time-to-target line, then test whether a smaller percentage gets you there years sooner.
How the calculation works
The down payment is only part of the cash requirement. Closing costs typically add another 2%–5% of the price, and lenders also want to see reserves — often two to six months of payments — left over after closing. Budgeting only the down payment is the most common reason a purchase stalls a week before completion.
The saving projection compounds your existing balance monthly at the rate you enter while adding contributions, which is how a high-yield savings account or short-term treasury ladder actually behaves. At today's rates, interest on a growing down payment fund is not decorative — on $50,000 at 4% it contributes about $2,000 a year, roughly two extra months of progress for many savers.
The strategic question is almost always 20% versus less. Twenty percent avoids PMI and earns a slightly better rate, but if reaching it takes four more years in a market rising 3% annually, the target itself moves faster than the savings do. Running both scenarios — buy now at 10% with PMI, or wait for 20% at a higher price — is the comparison that actually decides the question.
Down payment = price × percentage; Cash to close ≈ down payment + 2.5% of price; balance grows as Bₙ = Bₙ₋₁(1 + r/12) + contributionSource: NAR Profile of Home Buyers and Sellers (median down payment data); Freddie Mac Home Possible and Fannie Mae HomeReady 3% down programme guidelines.
Worked example
A $400,000 target with 20% down, $30,000 already saved and $1,200 a month at 4%.
- Down payment = 400,000 × 0.20 = $80,000.
- Closing costs at 2.5% add $10,000, so cash to close is $90,000.
- The gap is 90,000 − 30,000 = $60,000.
- At $1,200 a month plus 4% interest, the balance reaches $90,000 in roughly 45 months.
About 3.7 years to a full 20% down purchase — or under 18 months at 10% down, which is why the percentage choice matters more than the saving rate.
Frequently asked questions
Is 20% down actually required?+
No. Conventional loans go to 3% down, FHA to 3.5%, and VA and USDA loans to zero for eligible buyers. Twenty percent only avoids mortgage insurance.
Where should down payment savings sit?+
Somewhere liquid and safe — a high-yield savings account, money market fund or short treasuries. Money you need within three years does not belong in equities.
Do I need reserves on top of everything else?+
Usually. Many loan programmes want two to six months of payments remaining after closing, and underwriters verify it.
Can I use gift funds?+
Yes, with a signed gift letter confirming no repayment is expected. Lenders will trace the funds, so deposit them well before applying.
Last reviewed September 1, 2026. We review this page whenever the underlying formula, tax year, published rate or standard changes.