A down payment calculator answers two questions at once: how much will the down payment be, and how long will it take to save that much at your current monthly savings rate? Enter the home price, the target down-payment percentage, your monthly savings, and the APR you're earning on the cash, the calculator returns the dollar goal, months to save it, interest earned along the way, and the residual loan amount you'll finance.
For the loan-side math (payment on the financed portion), use the Mortgage Calculator; this page is for the save-up phase before the loan exists. The savings APR matters more than most savers realize, at 4–5% in modern high-yield accounts, the saving timeline shortens noticeably versus a 0.05% big-bank checking account.
Key takeaway
Twenty percent is a PMI threshold, not a virtue. Putting 20% down avoids private mortgage insurance, which typically costs 0.3–1.5% of the loan annually. Below 20%, PMI applies until the balance falls below 80% LTV. Above 20%, the marginal benefit of extra down payment shrinks, extra cash usually does more invested at expected market returns than as additional equity in the home, which earns only the home's appreciation rate.
How it's calculated
The down-payment goal is just home_price × down_payment_pct / 100.
The save-up timeline solves the future-value-of-annuity equation for the number of monthly periods, with the goal as the target FV, no starting balance, and the savings APR compounded monthly:
n = ln(1 + goal × r ÷ PMT) ÷ ln(1 + r)
where r is the monthly rate (savings APR ÷ 1200) and PMT is the monthly contribution. The result is in months.
Interest earned while saving = goal − PMT × n. The same monthly savings reach the goal faster as the APR rises, because interest compounding accelerates the run-up. Loan amount is simply home_price − down_payment_amount, what you'll finance when the savings phase ends.
Source: Future-value-of-annuity formula solved for periods (n) at a constant monthly contribution
Examples
$400K home, 20% down, $1,500/mo savings, 4% APR
- Home price $400,000
- Target down payment 20%
- Monthly savings $1,500
- Savings APR 4%
A 20% down payment on a $400,000 home is $80,000. Saving $1,500/month at 4% APR in a high-yield savings account hits that goal in about 49 months (4 years 1 month), and you'll have earned roughly $6,260 in interest along the way. After closing, the financed loan amount is $320,000. The same $80,000 saved at 0.05% APY in a checking account would take about 53–54 months, three months slower for no reason.
$550K home, 10% down, $2,000/mo savings, 4.5% APR
- Home price $550,000
- Target down payment 10%
- Monthly savings $2,000
- Savings APR 4.5%
Targeting a 10% down payment ($55,000) on a $550K home with $2,000/month savings at 4.5% APR takes about 26 months (2 years 2 months). Interest earned while saving is roughly $2,560. The financed loan amount of $495,000 will require PMI (since LTV is above 80%), but a 26-month timeline beats the ~52-month wait to save twice as much for 20% down, often the right trade-off in a rising-price market where waiting costs more than PMI.
Frequently asked questions
Do I really need 20% down?
No, 20% is the PMI threshold, not a requirement. FHA loans allow as little as 3.5% down; conventional first-time-buyer programs allow 3%; VA and USDA loans can be 0% down for eligible borrowers. Below 20%, you'll pay private mortgage insurance (PMI) of roughly 0.3–1.5% of the loan annually until the balance drops below 80% LTV. The trade-off: lower down means buying sooner (avoiding rent and home-price appreciation), at the cost of PMI for some years. The math often favors buying earlier with PMI in a rising-price market.
Where should I park down-payment savings?
For a horizon under 5 years, never invest the down payment in stocks, short-term volatility risks delaying the purchase materially. Best options: a high-yield savings account (HYSA) at 4–5% APY, a money-market fund at similar yield, or a short-term Treasury bill ladder for slightly higher yield with state-tax-exempt interest. All three are safe from principal loss and keep pace with inflation. Avoid: long bonds, equity funds, individual stocks, or anything with lockup periods that would prevent withdrawal at purchase time.
Should I take a smaller down payment to buy sooner?
Often yes, especially if home prices in your market are rising faster than your savings rate. A 5% down payment purchase locks in today's price; waiting 3 years to save 20% means buying at a higher price and a (potentially) higher rate. Run the math both ways: prospective home-price appreciation × (delay years) vs. PMI cost × (years until 80% LTV). In hot markets, buy with less down. In flat or declining markets, save more first.
Does down payment include closing costs?
No, down payment and closing costs are separate. Closing costs typically run 2–5% of the loan amount (lender fees, title insurance, appraisal, recording, escrow setup, prepaid taxes/insurance). On a $400K home with 20% down, closing costs add roughly $6,000–$15,000 on top of the $80K down payment. Some lender programs allow rolling closing costs into the loan or having the seller pay them ("seller concession"); plan for the cash separately if neither applies.
How is this different from a standard mortgage calculator?
A mortgage calculator starts the moment the loan exists, given price, down payment, rate, and term, what's the monthly payment? This calculator covers the pre-loan saving phase, given a target home price and a savings rate, when can you afford to buy? Use this one first (when can I afford to start?), then the mortgage calculator (what will the monthly payment be once I'm in?), then the affordability calculator to confirm the lender will approve the price your savings targeted.