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Down Payment Calculator
Use our Down Payment Calculator to determine the down payment required to buy a home based on the property purchase price and other factors. Your down payment depends on the price of the home you want to buy, what percentage of the purchase price you put down and your mortgage amount, which is based on current interest rates, your loan program and length and other inputs. In addition to your down payment, our calculator also determines your estimated closing costs including lender and appraiser fees and other third party expenses. It important to consider these expenses to make sure that you have the necessary funds to close your mortgage and buy the home. For example, you may have saved for your down payment and not realized how expensive closing costs are.
Our calculator shows you the total upfront cost required to buy a home including the money you put down plus estimated closing costs. Additionally, you can review how your down payment and total funds required change based on the percentage of the purchase price you put down. In short, the higher your down payment, the more money you need to contribute to purchase the property.
Our calculator also shows you the relationship between your down payment and the loan-to-value (LTV) ratio which is an important item when you apply for a mortgage. Your LTV ratio -- or the ratio of your mortgage amount to the value of your property -- impacts your maximum loan amount as well as your ability to qualify for certain loan programs.
Our Down Payment Calculator also enables you to understand how your mortgage amount, monthly payment and total monthly housing expense, including hazard insurance and property tax, changes with your inputs including the property purchase price. The more expensive the home you want to buy, the higher your down payment and closing costs. We also offer a version of this calculator that does not require personal information.
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Points  :Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount. |
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Monthly Housing Payments
| P & I Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance. |
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| Mortgage Insurance Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%. |
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| Property Tax Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ... |
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| Homeowner Insurance Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ... |
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| Homeowner Association Fee Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs. |
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Lender Fees
| Points Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount. |
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| Origination Fee Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan. |
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| Credit Report Fee Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness. |
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| Tax Service Fee Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender. |
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| Processing Fee Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower. |
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| Underwriting Fee Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package. |
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| Wire Transfer Fee Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower. |
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| FHA Upfront Premium FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception. |
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| Other Fees Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees) The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services. |
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Down Payment to Buy a Home
Most Lenders Require a Down Payment of 10% - 20% of the Home Purchase Price
Most lenders require a minimum down payment of 10% - 20% to qualify for a mortgage and 20% to receive the lowest interest rate from the lender. For example, if you are buying a home for $100,000 you would be required to make a down payment of $20,000 to receive the best mortgage terms from the lender ($100,000 (property value) * 20% (down payment) = $20,000). The down payment requirement may change based on mortgage program and loan amount with some lenders requiring higher down payments on jumbo loans. The down payment requirement can vary by lender so borrowers should contact multiple lenders to understand their policies. Use our Down Payment Calculator to understand how your loan amount and monthly payment change depending on how much you put down.
Low / No Down Payment Mortgage Programs
While 10% - 20% is the required down payment for most mortgages, there are multiple no and low down payment mortgage programs that enable borrowers to buy homes with little or no money down. For example, the USDA and VA home loan programs enable you to buy a home with no down payment, the HomeReady and Home Possible mortgage programs enable you to buy a home with a 3.0% down payment and the FHA mortgage program enables you to buy a home with a 3.5% down payment. Many large banks or credit unions also offer their own low down payment mortgage programs. In some cases, these programs may require borrowers to pay additional fees or a higher interest rate but they make owning a home more attainable for more borrowers.
Your Down Payment and Mortgage Insurance
If you make a down payment of less than 20% of the property purchase price you are typically required to pay some form of mortgage insurance, which protects the lender in the event you default on your loan. For conventional loans, borrowers pay private mortgage insurance (PMI) which is an additional ongoing monthly fee on top of your mortgage payment. In some cases borrowers pay PMI as a separate monthly fee (borrower paid PMI) and in other cases borrowers pay PMI by paying a higher interest rate (lender paid PMI) FHA and USDA mortgage borrowers are required to pay an upfront and ongoing mortgage insurance premium while VA mortgage borrowers are only required to pay an upfront funding fee. The amount of mortgage insurance varies depending on the mortgage program and other factors such as credit score and loan-to-value (LTV) ratio. Borrowers should understand how mortgage insurance increases their upfront and ongoing monthly mortgage costs if they make a down payment of less than 20%.
Additional Costs
In addition to your down payment, borrowers are required to pay for mortgage closing costs and potentially hold savings in reserve when the loan closes. Closing costs vary depending on your loan amount and property value and can run thousands of dollars. Our Down Payment Calculator shows you the additional costs involved in buying a home so you no how much money you need to close the purchase and avoid any surprises. Additionally, some lenders and mortgage programs require borrowers to maintain a minimum amount of savings in reserve at the time your mortgage closes. Although it may not be required by your lender, FREEandCLEAR recommends that you hold enough savings in reserve to cover three-to-six months of total monthly housing expense. For example if your total monthly housing expense is $1,5000, you would keep at least $4,5000 in reserves at the time your mortgage closes. Borrowers should understand the total amount of funds required to pay for their down payment, closing costs and savings in reserve to make sure they have sufficient funds to qualify for a mortgage.
The Relationship Between Your Down Payment and Loan-to-Value (LTV) Ratio
Loan-to-value (LTV) ratio is your mortgage amount divided by the fair market value of the property being financed according to an appraisal report. For example, if your mortgage amount is $80,000 and your property value is $100,000, your LTV ratio is 80% ($80,000 (loan amount) / $100,000 (property value) = 80% (LTV ratio)). Lenders usually apply a maximum LTV ratio of 80% to 90% although low down payment programs permit higher LTV ratios up to 100% in some cases. Your LTV ratio is inversely correlated to your down payment which means the more money you put down, the lower your LTV ratio and the easier it is to qualify for a mortgage. Lenders import LTV ratio limits because they want to make sure there is sufficient equity in the property in case you default on your mortgage. When you buy a home, from the lender's standpoint, the lower the LTV ratio the better which means you make a higher down payment. Be sure to understand your lender's LTV ratio limit before you apply for a mortgage.
More FREEandCLEAR Mortgage Resources
What Size Down Payment Do I Need to Buy a Home?
Review our comprehensive explanation of what size down payment you need to buy a home including informative examples
Comparison of No and Low Down Payment Mortgage Program
Review and understand multiple government-backed and conventional low or no down payment mortgage programs to understand key borrower benefits, program eligibility and qualification requirements.
Mortgage Rates
Compare mortgage rates and fees from top lenders near you. Comparing proposals from multiple lenders is the best way to find the mortgage that is right for you
Ask a Mortgage Expert
Got mortgage questions? We love answering them. Submit your mortgage questions and receive an informative response within 24 hours
Loan-to-Value (LTV) Ratio for a Mortgage
Understand the importance of an LTV ratio and why lenders focus on this figure when you apply for a mortgage
Sources
Down Payment: https://www.consumerfinance.gov/about-us/blog/how-decide-how-much-spend-your-down-payment/