Down Payment Calculator

While 20% down avoids Private Mortgage Insurance (PMI) and secures lower interest rates, many loan programs require much less. Conventional loans often allow as little as 3% down, FHA loans require 3.5%, and VA or USDA loans allow 0% down for eligible borrowers.

A 20% down payment eliminates the requirement for Private Mortgage Insurance (PMI), which saves between 0.5% and 1.5% of the loan balance every year. It also lowers your monthly mortgage payment, builds instant equity, and protects you against market fluctuations.

Since you will need the funds within a few years, down payment savings should be held in liquid, low-risk, high-yield accounts such as High-Yield Savings Accounts (HYSA), Money Market Accounts, or short-term Certificates of Deposit (CDs), earning around 4% to 5% APY.

In addition to your down payment, buyers should typically budget 2% to 5% of the loan amount for closing costs, which cover appraisal fees, title insurance, loan origination fees, home inspections, and prepaid taxes and insurance.

By keeping your funds in a high-yield account earning compound interest, the monthly interest payments accumulate and generate their own interest, shaving several months off your target timeline compared to saving in a non-interest-bearing checking account.