Down Payment Calculator

How much down payment do I need to buy a home?

Plan your savings to reach your home buying goal.

Plan a Realistic Down Payment Goal

Estimate your target amount, savings runway, and timeline based on monthly contributions and APY.

Use this for

Comparing 5% vs 20% down scenarios
Setting monthly savings targets
Planning around home price changes

You will get

Down payment target amount
Months/years to reach goal
Savings growth projection

Quick Result

Estimated time to down payment goal

4.1 years

Target: $70,000.00

Based on

• Target home price: $350,000.00
• Down payment goal: 20%
• Current savings + monthly contribution: $15,000.00 + $1,000.00

Goal Settings

Target Home Price

Down Payment %

20%

Goal: $70,000.00

Savings Plan

Current Savings

Monthly Contribution

Savings APY

Time to Goal

4.1 Years

49 Months total

Savings Projection

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The Strategic Down Payment: Liquidity vs. Leverage (2026)

Key Insights & Concepts

The "20% Down" rule is a relic of the 20th century. In 2026, sophisticated buyers treat the down payment not as a moral obligation, but as a strategic lever. It is a trade-off between **Monthly Cash Flow** (lower payments) and **Liquidity** (cash on hand). This guide explores how to optimize that trade-off without leaving yourself "house poor."

The "Cash to Close" Trap

Your "Down Payment" is only ~70% of the cash you need. Do not forget Closing Costs (2-5% of price) and Reserves (3-6 months of payments required by lenders).
Example: On a $500k home, a 20% down payment is $100k. But you truly need ~$125k liquid to sign the papers.

1The Math of PMI: Friend or Fee?

Private Mortgage Insurance (PMI) is demonized, but it can be a powerful tool to accelerate wealth.

The Cost of Waiting

If home prices rise 5% annually, a $400k home becomes $420k next year. That $20k increase likely exceeds the cost of PMI ($1k-$2k/yr). Buying now with 5% down and paying PMI is often mathematically superior to renting for 3 years to save 20%.

The "5% Option"

Conventional loans allow 3-5% down. If you have $100k, you could put 20% down on a $500k house. OR, you could put 5% down ($25k) and keep $75k invested in the market or used for renovations. Liquidity is safety. Equity is dead money until you sell.

Sourcing Your Funds (The "Seasoning" Rule)

Lenders are obsessed with the source of your money to prevent money laundering.

60-Day Seasoning: Lenders look at 2 months of bank statements. Any large deposit (usually >50% of monthly income) must be explained. If you have cash under your mattress, put it in the bank 3 months before applying.
Gift Funds: You can use money from parents, but it requires a Gift Letter stating it is not a loan. If you are borrowing the down payment (unsecured loan), that is fraud.
Referencing Sale of Assets: If you sold stock or crypto, you need the transaction receipt AND the transfer trail. You cannot just show a deposit from "Coinbase."

Strategy: The "Recast" Play

Problem: You want to buy a new house before selling your old one, but your equity is trapped.
Solution: Buy the new house with 5% down (using savings/bridge loan). Once the old house sells, take that large lump sum and "Recast" your new mortgage (usually a $250 fee). The lender applies the lump sum, re-amortizes the loan, and lowers your monthly payment without a full refinance.

Frequently Asked Questions

Strictly speaking, no. You cannot use an unsecured personal loan for a down payment. However, you CAN use a loan secured by another asset (like a 401k loan or HELOC on another property) if the lender approves the new Debt-to-Income ratio.

Lenders look back 60 days. 'Sourcing' means proving where a deposit came from (a pay stub, a sale of stock). 'Seasoning' means money that has been sitting in your account for 60+ days, which lenders generally consider 'yours' no questions asked.

Yes. In a hot market, if you offer $550k but the house appraises for $500k, the bank only lends on $500k. If you have a large down payment, you can cover that $50k 'Appraisal Gap' with cash. If you only have 3% down, the deal often falls apart.

Conventional 97 (3% down) is usually better if you have a Credit Score > 720 because PMI ends at 20% equity. FHA requires 3.5% down and allows lower credit scores, but the Mortgage Insurance Premium (MIP) sticks for the **life of the loan** unless you put 10% down or refinance.

Recasting is when you make a large lump-sum payment toward your principal (e.g., $50k) and ask the lender to re-calculate your monthly payments based on the new, lower balance. The term/interest rate stays the same, but the required payment drops. Great for after you sell a previous home.

Yes, but it is a paperwork headache. Lenders need a full transaction history showing you bought the crypto and held it. The easiest path: Sell the crypto 60+ days before applying and let the cash 'season' in your bank account.

In 2026, a parent can give you up to ~$19k (annual exclusion) without even reporting it. Even if they give you $100k, they likely won't owe taxes; they just have to file a form deducting it from their lifetime estate exemption ($13M+). Don't let tax fears stop family help.

Buying points (paying 1% fee to lower rate by 0.25%) makes sense if you keep the loan for 7+ years. If you plan to move or refinance in 3 years, putting that money toward the Down Payment (instant equity) is usually safer.

Absolutely not. Lenders will check your credit report immediately before closing. A new large debt could disqualify you entirely.

You can request removal when your Loan-to-Value (LTV) hits 80%. It legally *must* drop off at 78%. If home values skyrocket, you may reach 80% LTV faster than the payment schedule implies—order a new appraisal (usually ~$500) to prove it and kill the PMI early.

Lenders want to see you have money left over *after* closing. They typically require 2-6 months of mortgage payments (PITI) remaining in your bank accounts. Do not drain your last dollar to close.

Interestingly, most lenders do NOT count the 401(k) loan repayment as a monthly debt in your DTI ratio calculation, because you are paying yourself back. This makes it a very efficient way to access cash for a down payment.

This tool is for illustrative purposes only and does not constitute professional financial, tax, or legal advice. Calculations are estimates and may not reflect real-world variables or local regulations. Always consult with a qualified professional before making financial decisions.

Methodology and Trust

How this was calculatedLast updated: February 2026Reviewed by: Editorial Team

Formulas

Target down payment

target = homePrice × (downPaymentPercent / 100)

Amount still needed

needed = max(0, target - currentSavings)

Monthly growth

nextBalance = currentBalance + monthlyContribution + (currentBalance × apy/12)

Timeline

months = iterations until savings balance reaches target