Down Payment Formula:
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A down payment is the initial upfront portion of the total amount due when purchasing a home with a mortgage. It represents your equity in the home from day one and reduces the amount you need to borrow.
The calculator uses the simple formula:
Where:
Example: For a $300,000 home with 20% down payment: $300,000 × 0.20 = $60,000 down payment.
Details: A larger down payment reduces your loan amount, may eliminate private mortgage insurance (PMI), and can result in better interest rates and lower monthly payments.
Tips: Enter the home price in dollars (without commas) and the down payment percentage (e.g., 20 for 20%). Both values must be positive numbers.
Q1: What is the typical down payment percentage?
A: Conventional loans often require 20%, but FHA loans may require as little as 3.5%. Some conventional loans accept 3-5% down.
Q2: Does a larger down payment always make sense?
A: Not always. Consider your overall financial picture, including emergency savings, retirement accounts, and other debts.
Q3: Are there programs for low down payments?
A: Yes, programs like FHA loans, VA loans (for veterans), and first-time homebuyer programs often have lower down payment requirements.
Q4: How does down payment affect mortgage insurance?
A: With conventional loans, less than 20% down typically requires PMI. FHA loans have mortgage insurance regardless of down payment size.
Q5: Can gift funds be used for down payment?
A: Yes, many loan programs allow gift funds from family members, though documentation is required.