Down Payment Calculator: What Every Percentage Point Costs (or Saves) You

The 20% down payment rule has been drilled into buyers for decades. And for good reason: it eliminates PMI, gives you instant equity, and lowers your monthly payment. But in 2026, when the median home price is $420,000+, 20% down is $84,000. Most first-time buyers do not have $84,000 sitting in a savings account.

Down Payment Math on a $400,000 Home

Here is what each down payment level looks like at a 7% interest rate over 30 years:

| Down Payment | $ Amount | Loan Amount | Monthly P&I | PMI/Month | Total Monthly | Total Interest (30yr) | |-------------|---------|-------------|------------|-----------|---------------|----------------------| | 3% | $12,000 | $388,000 | $2,581 | $162 | $2,743 | $541,160 | | 5% | $20,000 | $380,000 | $2,528 | $143 | $2,671 | $529,880 | | 10% | $40,000 | $360,000 | $2,395 | $108 | $2,503 | $502,200 | | 15% | $60,000 | $340,000 | $2,262 | $51 | $2,313 | $474,320 | | 20% | $80,000 | $320,000 | $2,129 | $0 | $2,129 | $446,440 |

The jump from 3% to 20% down: $614/month less and $94,720 less in total interest. That is the cost of buying sooner with less saved.

When Less Than 20% Down Makes Sense

1. Home prices are rising faster than you can save. If homes in your market appreciate 5% per year and you save $1,000/month toward a down payment, you are falling behind. Buying at 5% down locks in today's price.

2. Your rent is higher than the mortgage would be. If renting costs $2,800 and a mortgage with PMI costs $2,500, you save money by buying even with PMI.

3. You can invest the difference at a higher return. If keeping $60,000 invested in the S&P 500 at 10% earns $6,000/year and PMI costs $1,800/year, the math says invest.

When 20% Down Is Worth Waiting For

1. Your PMI rate is high. Borrowers with credit scores below 700 face higher PMI premiums that can take years to cancel. Run the numbers.

2. You are in a flat or declining market. If home prices are stagnant, there is no urgency penalty for waiting.

3. You want the lowest possible monthly payment. Every percentage point of down payment lowers your monthly obligation. If cash flow is tight, the bigger down payment provides breathing room.

How to Calculate Your Down Payment Savings Timeline

Months to Goal = (Target Down Payment - Current Savings) / Monthly Savings

Example:

• Target: $60,000 (15% on $400,000)
• Current savings: $18,000
• Monthly savings toward down payment: $2,000
• Months remaining: ($60,000 - $18,000) / $2,000 = 21 months

If you are earning 4.5% APY on that savings in a high-yield account, compound interest shaves off about 1 month from the timeline.

Use our Mortgage Calculator to model your exact scenario with different down payment amounts, and our Home Affordability Calculator to see what purchase price your income supports.

Frequently Asked Questions

Can I use gift money for a down payment? Yes. Conventional loans, FHA, and VA all allow gift funds for down payments. The donor must provide a signed gift letter confirming the money is a gift, not a loan. FHA requires that at least 3.5% comes from the borrower's own funds or a gift from a family member.

Does PMI ever go away? On conventional loans, you can request PMI cancellation once you reach 20% equity (based on the original purchase price). At 22% equity, the lender must automatically cancel it. FHA loans are different: if you put less than 10% down, FHA mortgage insurance stays for the life of the loan. This is a major reason to choose conventional over FHA if your credit qualifies.