Do I need 20% down to buy a home?
No. Many loan programs allow less, but buying with less than 20% down usually means more leverage, a larger payment, and possible PMI.
Down Payment Calculator
Compare equity, PMI, and cash-to-close tradeoffs before you decide how much to put down
Purchase assumptions
Compare what a smaller down payment really changes in monthly cost and cash to close.
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Down payment strategy
$40,000
A lower down payment can still work
The tradeoff is a larger loan balance, a higher monthly payment, and possible PMI until your equity grows.
Loan amount
$360,000
LTV 90.0%
PMI
$180
Monthly PMI estimate
Cash to close
$50,000
Down payment + closing costs
20% gap
$40,000
Extra cash needed for 20%
Current down payment plan
Monthly principal and interest$2,187
Monthly PMI$180
Total monthly payment$2,932
If you reached 20%
Monthly savings$423
Interest savings over term$47,496
Extra cash required$40,000
How to use this result
- -Use the monthly savings figure to decide whether waiting for 20% is realistic or whether buying sooner with PMI is acceptable.
- -Keep separate reserves for moving, repairs, and furnishings; the best down payment amount is not always the maximum you can technically send at closing.
- -If you are close to 20%, compare the cost of waiting against local price growth and rent inflation instead of treating PMI alone as the full tradeoff.
About This Tool
Equity strategy
See what different down payments buy you in payment and flexibility
This tool compares how down payment size affects loan amount, PMI, monthly cost, and cash to close so you can choose a stronger starting position.
Typical Use
About 1 minute
Best For
Buyers balancing lower monthly cost against keeping enough reserves
Main Output
Payment, PMI, and cash-to-close tradeoff estimates
Built Around
Standard mortgage math and planning assumptions
What to prepare
- Home price, down payment percentage, rate, term, and housing costs
- Estimated PMI rate and closing-cost assumptions
What you get back
- Projected loan amount, monthly payment, and PMI impact
- Comparison between your current plan and a higher-equity benchmark
Why trust this view
- Shows how lower leverage affects both upfront cash and recurring cost
- Helps frame 20% down as a tradeoff, not a universal rule
- Works best when paired with reserve planning and affordability analysis
Source notes and methodology details are available on our references page.
PMI TradeoffStarting EquityCash Planning
Industry-Standard Calculations
Our calculations follow the Truth in Lending Act (TILA) guidelines and use standard financial formulas employed by major lending institutions.
Monthly Payment Calculation
M = P[r(1+r)^n]/[(1+r)^n-1]Where M = monthly payment, P = principal loan amount, r = monthly interest rate, n = number of payments
Amortization Schedule
Standard declining balance methodEach payment is split between interest (calculated on remaining balance) and principal reduction
APR Estimation
Includes interest + fees over loan termAnnual Percentage Rate calculations include all financing charges as required by Truth in Lending Act (TILA)
About MortgageCalcMaster
Content is published under the MortgageCalcMaster editorial team workflow, currently led by the site operator, reviewed against public mortgage and consumer-finance sources, and updated when assumptions, formulas, or product behavior materially change.
Last reviewed: March 2026. All calculators and guides are intended for education and planning. They do not replace lender disclosures or advice from licensed professionals. Learn more about our editorial process
How to Use Down Payment Calculator
1
Enter the home price and your planned down payment percentage.
2
Add mortgage rate, term, tax, insurance, and HOA dues so the monthly payment reflects the full ownership cost.
3
Use the PMI rate to estimate the cost of buying below the 20% threshold.
4
Compare the current plan with the 20% benchmark to see how much monthly savings the extra equity would buy.
Key Terms Explained
- LTV
- Loan-to-value ratio, or loan amount divided by property value.
- PMI
- Private mortgage insurance that may apply when the loan starts above an 80% loan-to-value ratio.
- Cash to Close
- The down payment plus estimated closing costs due before or at settlement.
- 20% Threshold
- A common conventional-mortgage milestone that can eliminate PMI from the start.
Pro Tips
- The best down payment is the one that balances monthly cost with healthy reserves after closing.
- A smaller down payment can still be rational if it keeps enough liquidity for repairs, moving, and emergency savings.
- Run this tool alongside the affordability and PMI removal tools instead of judging the decision by one number.
Important Note
This calculator provides estimates based on standard formulas. Actual loan terms may vary based on your credit score, lender policies, and market conditions. Always consult with a qualified mortgage professional before making financial decisions.
Related Guides
Use these guides to connect the upfront cash choice with PMI, reserves, and total purchase readiness.
Guide
Down Payment Guide
Compare common down payment sizes and see how they affect borrowing flexibility.
Guide
PMI Guide
Understand when PMI applies and how to remove it once equity improves.
Guide
Cash-to-Close Guide
Separate down payment, settlement fees, and reserve cash before you commit funds.
FAQ
Down Payment Calculator FAQ
These answers explain the assumptions behind the calculator so users can interpret the output with the right context.
Why does 20% matter so much?
At 20% down, many conventional loans avoid PMI entirely. That reduces monthly cost and often makes the loan more flexible over time.
Should I always wait until I have 20%?
Not always. Waiting can help, but the right answer depends on rent growth, home prices, your reserves, and whether buying earlier still leaves enough cash after closing.