When buying a home, the biggest down payment you can afford is not necessarily the smartest one to make. Putting more money down reduces the amount you need to borrow, but it also leaves less cash available for closing costs, repairs, moving expenses and unexpected bills.
The right balance depends on what you can comfortably pay each month and how much money you will have left after buying the property.
Imagine you are purchasing a $350,000 home with a 30-year mortgage at 6.5%. A 5% down payment requires $17,500 upfront, while putting down 20% requires $70,000. The larger contribution reduces your mortgage payment, but it also commits an additional $52,500 to the property.
Before choosing the higher amount, ask yourself two questions: How much would the lower mortgage payment help my monthly budget, and would I still have enough cash to handle the costs of becoming a homeowner?
Use the Down Payment Calculator to compare different percentages against the same purchase price and interest rate. Looking at several options side by side can help you identify a down payment that balances borrowing costs with the need to keep some savings accessible.
What Different Down Payments Actually Cost on the Same Home
A percentage can feel abstract until you translate it into dollars. The following comparison shows how changing the down payment affects the amount borrowed and the estimated monthly principal-and-interest payment.
Assume a $350,000 home, a 6.5% annual mortgage interest rate and a 30-year fixed-rate mortgage.
| Down payment |
Cash paid upfront |
Mortgage amount |
Estimated monthly P&I |
| 5% |
$17,500 |
$332,500 |
$2,101 |
| 10% |
$35,000 |
$315,000 |
$1,990 |
| 20% |
$70,000 |
$280,000 |
$1,770 |
These payments are rounded estimates and exclude property taxes, homeowners insurance, mortgage insurance, HOA fees and closing costs.
Moving from 5% to 10% down requires another $17,500 upfront and lowers the estimated monthly principal-and-interest payment by about $110. Moving from 10% to 20% down requires another $35,000 and reduces that payment by roughly $220 per month.
The comparison reveals an important trade-off: more cash upfront means less borrowing and a smaller required mortgage payment. However, the money you contribute is tied up in home equity rather than remaining available in your bank account.
For a buyer who has substantial savings left over, a larger down payment may be comfortable. For someone whose savings would nearly disappear at closing, a smaller contribution may leave a more useful financial cushion.
These figures also assume the same interest rate for every scenario. Actual mortgage offers may differ by down payment, credit profile, loan type and lender, so use real loan quotes when making the final comparison.
Your Down Payment Is Not the Same as Your Total Cash Needed to Buy
One of the easiest ways to underestimate the cost of buying a home is to focus on the down payment and forget about everything else due around closing.
Suppose you have $75,000 in savings and are considering the same $350,000 home. A 20% down payment would use $70,000, leaving just $5,000 before paying any closing costs or moving expenses. A 10% down payment would use $35,000, leaving $40,000 available for those costs and other financial needs.
That difference can matter considerably during the first few months of ownership, when you may need to move, purchase essential furniture, fix a problem discovered during inspection or pay for an unexpected repair.
Your total upfront budget may need to account for:
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Closing costs: Lender charges, appraisal fees, title services and other expenses associated with completing the purchase.
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Prepaid expenses: Depending on the transaction, these may include initial homeowners insurance premiums and property-tax deposits.
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Moving and setup costs: Movers, utility connections, essential appliances and other immediate expenses.
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Repairs and maintenance: Even a property that looks ready to occupy may need work after you move in.
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Emergency savings: Money reserved for an income interruption, urgent repair or other unexpected expense.
For U.S. home purchases, the Consumer Financial Protection Bureau says closing costs commonly range from 2% to 5% of the purchase price, separate from the down payment. Actual costs depend on the lender, property, loan and location. On a $350,000 home, that broad range would be $7,000 to $17,500.
Source: https://www.consumerfinance.gov/owning-a-home/prepare/determine-your-down-payment/
This is why the full amount in your savings account should not automatically be treated as money available for a down payment. First account for expected transaction costs and the cash you want to retain afterward. The Budget Calculator can help you assess how a new housing payment may fit into your monthly finances.
Does Putting Down 20% Always Save You More?
A 20% down payment is a useful benchmark for many U.S. conventional mortgages because it generally avoids private mortgage insurance (PMI). But reaching that threshold is not the only consideration when choosing a mortgage.
PMI protects the lender against certain losses if the borrower defaults; it does not protect the homeowner from missing payments. When required, it adds to the cost of a mortgage. PMI premiums vary according to factors such as the loan, down payment and borrower profile. Other loan programs have different mortgage-insurance requirements. Source: https://www.consumerfinance.gov/ask-cfpb/what-is-private-mortgage-insurance-en-122/
Return to the $350,000 home example. With 10% down, you contribute $35,000 and borrow $315,000. With 20% down, you contribute $70,000 and borrow $280,000. The second option may avoid conventional PMI, but it requires an additional $35,000 upfront.
To determine whether that extra contribution is worthwhile, compare the actual mortgage offers rather than assuming a fixed insurance saving. Ask lenders to show the interest rate, monthly PMI premium, other fees and total monthly payment for each down payment option.
Also consider how long you expect to keep the mortgage. The value of avoiding PMI can change depending on the premium, how long it applies, and whether a different loan option offers a higher interest rate or other costs.
The calculator’s PMI savings figure should be treated as an estimate, not a personalized insurance quote. Unless the calculation accounts for the relevant loan program and premium assumptions, the actual saving may be different.
The decision is ultimately about the whole financial picture. Avoiding PMI can be beneficial, but it may not justify using nearly all your liquid savings. Compare the cost of borrowing with the value of keeping money available for emergencies and other priorities.
When a Smaller Down Payment May Make More Sense
Waiting until you can put 20% down is not always the best choice. Depending on your circumstances and the mortgage programs available to you, buying with a smaller contribution may be reasonable.
Consider a buyer who has saved $45,000 toward a $350,000 home. A 10% down payment would use $35,000, while a 20% down payment would require $70,000. Waiting to save the additional $35,000 could take considerable time, during which rent, home prices and mortgage rates might change. None of those changes is guaranteed to move in the buyer’s favor.
On the other hand, buying sooner with 10% down means borrowing more and potentially paying PMI or other costs that would not apply to a different loan structure. The buyer must decide whether the available mortgage is affordable and whether enough savings will remain after closing.
A smaller down payment deserves consideration when:
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A larger contribution would leave too little money for emergencies.
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Your income or employment situation makes accessible savings especially important.
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You expect near-term expenses such as relocation, repairs or family costs.
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You qualify for a suitable low-down-payment mortgage and understand its full cost.
A smaller down payment is not automatically better, just as a larger one is not automatically better. Compare the monthly payment, loan terms, insurance requirements and remaining cash before deciding.
If your goal is to build your down payment before buying, the Savings Calculator can estimate how regular contributions and interest may help your savings grow over a chosen period.
How Your Down Payment Changes Loan-to-Value Ratio
Your down payment affects more than the amount you borrow. It also changes the loan-to-value ratio, commonly shortened to LTV.
LTV compares the mortgage amount with the property’s value used by the lender. For a straightforward purchase, the purchase price is often a useful starting point for estimating it.
Using the $350,000 home:
| Down payment |
Mortgage amount |
Initial LTV |
| 5% ($17,500) |
$332,500 |
95% |
| 10% ($35,000) |
$315,000 |
90% |
| 20% ($70,000) |
$280,000 |
80% |
A 95% LTV means the mortgage represents 95% of the home’s value, while the buyer contributes the remaining 5% as a down payment. At 80% LTV, the mortgage represents a smaller share of the purchase price.
A lower LTV can affect the mortgage options and pricing available to you, including mortgage-insurance requirements. However, it does not guarantee approval or a particular interest rate. Lenders also consider factors such as income, existing debts, credit history, property details and the loan program.
Use the LTV result alongside the estimated payment to understand how much of the property you would finance. Then compare actual lender offers to see how that ratio affects the terms available to you.
What This Down Payment Calculator Includes—and What It Doesn’t
The CalculatorSee Down Payment Calculator helps you explore how your upfront contribution affects the size and estimated cost of a mortgage. Its inputs focus on the home purchase price, down payment percentage and mortgage interest rate.
The results help you compare:
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Down payment cash required: The amount calculated from the purchase price and selected percentage.
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Mortgage amount: The purchase price remaining after subtracting the down payment.
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Monthly principal and interest: An estimate based on the loan amount, interest rate and assumed 30-year fixed term.
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Loan-to-value ratio: The mortgage amount expressed as a percentage of the purchase price.
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Estimated monthly PMI savings: An illustrative figure related to the calculator’s assumptions about mortgage insurance.
The calculator is useful for comparing scenarios, but it does not provide a complete mortgage quote. Unless separately included in the calculation, the estimated principal-and-interest payment excludes property taxes, homeowners insurance, HOA fees, closing costs and other ownership expenses.
It also cannot determine whether a lender will approve your application or guarantee that you will qualify for a particular interest rate or mortgage-insurance arrangement.
One point deserves particular attention: the displayed PMI savings estimate should not be interpreted as the exact amount every borrower will save by putting down 20%. Actual PMI costs depend on the mortgage and borrower, and some loan programs follow different insurance rules.
For a more complete affordability assessment, compare the results with your expected total housing expenses and the cash you will retain after closing. You can then use the Mortgage Calculator to explore mortgage payments and the Budget Calculator to see how those payments fit your monthly finances.
The goal is not simply to make the down payment as large as possible. It is to choose an upfront contribution that makes the mortgage manageable without leaving you financially stretched once you own the home.
