Down Payment Calculator: Loan Size, PMI & Payments
Short answer
This down payment calculator determines your upfront cash requirement, total mortgage balance, monthly principal and interest, and private mortgage insurance (PMI). For a $350,000 home with 10% down, you need $35,000 upfront, resulting in a $315,000 loan, a $1,991.01 base monthly payment, and $131.25 in monthly PMI.
Formula
Down Payment = Home Price × (Down Payment % / 100) Loan Amount (L) = Home Price - Down Payment Monthly PMI = (Loan Amount × (Annual PMI Rate % / 100)) / 12 (if Down Payment % < 20%) Monthly P&I = L × [c(1 + c)^n] / [(1 + c)^n - 1]
Home Price is the total contracted purchase price of the property. Down Payment % is the percentage of the purchase price paid in cash at closing. Loan Amount (L) is the remaining balance financed through the lender. c is the monthly interest rate, calculated as Annual Mortgage Rate divided by 1,200. n is the total number of monthly payments (Loan Term in years multiplied by 12). Annual PMI Rate % is the annual cost of private mortgage insurance, applied only when the down payment is below 20%.
Worked example
- Home price
- 350000
- Down payment
- 10
- Mortgage rate
- 6.5
- Loan term
- 30
- PMI rate (if down < 20%)
- 0.5
- Down payment: 35,000.00
- Loan amount: 315,000.00
- Principal & interest: 1,991.01
- Monthly PMI: 131.25
- Monthly payment with PMI: 2,122.26
- Needed for 20% down: 70,000.00
What the Down Payment Calculator Computes
The Down Payment Calculator helps home buyers determine the financial impact of their initial cash contribution on a real estate purchase. Buying a home involves more than just calculating principal and interest; the upfront cash directly determines your loan balance, the interest paid over time, and whether you must pay private mortgage insurance (PMI).
By inputting the home purchase price, down payment percentage, interest rate, loan term, and expected PMI rate, the calculator outputs:
- Down payment: The liquid cash required toward the purchase price.
- Loan amount: The net principal amount financed through the mortgage.
- Principal & interest (P&I): The standard amortized monthly loan payment.
- Monthly PMI: The insurance surcharge applied when financing more than 80% of the purchase price on conventional loans.
- Monthly payment with PMI: The combined baseline debt service due each month.
- Needed for 20% down: The target equity benchmark required to eliminate PMI.
This tool is designed for prospective home buyers evaluating how different savings amounts alter their monthly carrying costs.
Step-by-Step Worked Example
To see how the calculations function in practice, consider a standard conventional home purchase scenario:
- Home price: $350,000.00
- Down payment: 10%
- Mortgage rate: 6.5% per year
- Loan term: 30 years
- PMI rate: 0.5% per year
Step 1: Calculate the Down Payment and Loan Amount
Multiply the home purchase price by the down payment percentage: $$\text{Down Payment} = $350,000 \times 0.10 = $35,000.00$$
Subtract the down payment from the purchase price to obtain the financed loan balance: $$\text{Loan Amount} = $350,000 - $35,000 = $315,000.00$$
Step 2: Compute Monthly Principal and Interest (P&I)
Convert the annual interest rate and term to monthly terms:
- Monthly interest rate ($c$) = $0.065 / 12 \approx 0.00541667$
- Total payments ($n$) = $30 \times 12 = 360$
Using the standard amortization formula: $$\text{P&I} = $315,000 \times \frac{0.00541667(1 + 0.00541667)^{360}}{(1 + 0.00541667)^{360} - 1} = $1,991.01$$
Step 3: Compute Monthly PMI
Because the down payment is 10% (which is less than the standard 20% threshold), PMI applies. Multiply the loan amount by the annual PMI rate and divide by 12: $$\text{Monthly PMI} = \frac{$315,000 \times 0.005}{12} = $131.25$$
Step 4: Sum Total Monthly Payment and Review Thresholds
Combine principal, interest, and mortgage insurance: $$\text{Total Monthly Payment} = $1,991.01 + $131.25 = $2,122.26$$
To eliminate PMI entirely, the borrower would need a 20% down payment: $$\text{Needed for 20% Down} = $350,000 \times 0.20 = $70,000.00$$
How to Read Your Results
- Down Payment: This figure represents strictly the equity contribution at purchase. Ensure you do not confuse this with "cash to close," which also includes third-party lender, escrow, and title fees.
- Loan Amount (LTV): A $315,000 loan on a $350,000 home corresponds to a 90% Loan-to-Value (LTV) ratio. Lenders use LTV to price risk; higher LTV tiers generally carry higher interest rates or stricter credit thresholds.
- Monthly PMI: At $131.25 per month, PMI represents an annual cost of $1,575.00 that does not reduce loan principal. Compare this cost against the opportunity cost of delaying your purchase to save the full $70,000 (20%) required to bypass it.
Practical Tips for Managing Your Down Payment
- Maintain Post-Closing Reserves: Lenders often verify that you have 2 to 6 months of living expenses remaining in savings after paying your down payment and closing costs.
- Weigh PMI vs. Delayed Appreciation: Paying PMI for several years is often less expensive than waiting years to save 20% if housing prices appreciate faster than your savings rate.
- Explore Gift Funds: Many conventional programs permit verified gift funds from immediate family members to satisfy part or all of the down payment requirement.
- Monitor Cancellation Milestones: Under the Homeowners Protection Act, you can request PMI cancellation once your loan balance is scheduled to reach 80% of original value, or automatic termination at 78%.
When Not to Rely on This Calculator
This calculator reflects standard conventional financing formulas. Do not rely on it as a comprehensive housing budget under the following conditions:
- FHA, VA, or USDA Loans: FHA loans utilize a specific upfront Mortgage Insurance Premium (MIP) of 1.75% plus ongoing annual MIP, while VA loans feature funding fees in place of ongoing monthly insurance.
- Exclusion of Escrow Items: The figures generated do not include real estate property taxes, homeowners insurance, flood insurance, or monthly homeowners association (HOA) dues.
- Lender-Paid PMI: Some loan products trade a zero monthly PMI payment for a slightly higher base mortgage interest rate.
Comparison
| Scenario | Input | Result |
|---|---|---|
| Lower input | Home price: 280000 | Down payment: 28,000.00 |
| Base example | Home price: 350000 | Down payment: 35,000.00 |
| Higher input | Home price: 420000 | Down payment: 42,000.00 |
Common mistakes
- Depleting emergency savings to reach a higher down payment tier, leaving no cash reserves for home repairs
- Forgetting closing costs, prepaid property taxes, and homeowners insurance due at the time of closing
- Assuming private mortgage insurance (PMI) is a permanent fee, rather than one that can be canceled at 20% home equity on conventional loans
- Ignoring how down payment size impacts the offered mortgage interest rate and lender underwriting fees
- Confusing conventional loan PMI with government-backed loan mortgage insurance, such as FHA MIP or VA funding fees
Checklist
- Verify your available liquid savings separate from emergency funds and moving expenses
- Account for closing costs, which typically range from 2% to 5% of the total loan amount
- Check lender requirements for minimum down payments based on loan type (e.g., conventional vs. FHA)
- Obtain an accurate PMI quote based on your credit score and exact loan-to-value ratio
- Confirm the target savings needed to achieve 20% down to eliminate monthly PMI entirely
- Review your debt-to-income (DTI) ratio with the estimated total monthly mortgage payment
Calculators Percentage Editorial Team
Calculator guides from the Calculators Percentage team. These introductory examples are educational, not professional advice.
Last reviewed:
This calculator provides estimates for educational purposes and does not account for property taxes, homeowners insurance, HOA fees, or specific lender underwriting guidelines. Consult a licensed mortgage professional before making real estate commitments.