How to Calculate a Down Payment (Formula + Examples)
The down payment formula is straightforward:
For example, to calculate a 20% down payment on a $350,000 home:
$350,000 × 0.20 = $70,000
If you already have a down payment saved and want to know the percentage:
For a $25,000 down payment on a $350,000 home: ($25,000 ÷ $350,000) × 100 = 7.14%. This also determines your loan-to-value (LTV) ratio, which is critical for mortgage approval, interest rate pricing, and PMI eligibility. Your LTV = 100% − down payment percentage. A 7.14% down payment means a 92.86% LTV.
Our mortgage calculator uses this same logic to project your monthly principal and interest once you know your loan amount.
Minimum Down Payment by Loan Type — 2026 Requirements
One of the biggest misconceptions in home buying is that you always need 20% down. In reality, several loan programs allow much smaller down payments — and two require zero down. Here is how each loan type compares:
| Loan Type | Min. Down | Key Detail |
|---|---|---|
| Conventional Loan | 3% | No PMI required at 20%+ |
| FHA Loan (580+ credit) | 3.5% | MIP required regardless of down payment |
| FHA Loan (500–579 credit) | 10% | Higher MIP applies |
| VA Loan | 0% | Eligible veterans & active duty only |
| USDA Loan | 0% | Rural/suburban areas only |
| Jumbo Loan | 10–20% | Above 2026 conforming loan limit ($806,500) |
| Conventional (First-Time) | 3% | HomeReady / Home Possible programs |
2026 conforming loan limit update: The Federal Housing Finance Agency (FHFA) set the baseline conforming loan limit at $806,500 for 2026 (up from $766,550 in 2024). In high-cost areas, the limit is $1,209,750. Any loan above these amounts is classified as a jumbo loan and will require a larger down payment and stronger credit profile.
First-time buyer tip: Programs like Fannie Mae's HomeReady and Freddie Mac's Home Possible allow 3% down with income-based eligibility. Pair these with your state's down payment assistance program to reduce the cash you need at closing. Use our home affordability calculator to see what purchase price makes sense before choosing a loan type.
Down Payment Amounts by Home Price (House Down Payment Calculator Guide)
The table below shows common down payment amounts across home prices and percentage options — the same output our house down payment calculator produces instantly. Use it to quickly estimate how much you need for any home price.
| Home Price | 3% Down | 5% Down | 10% Down | 20% Down |
|---|---|---|---|---|
| $200,000 | $6,000 | $10,000 | $20,000 | $40,000 |
| $250,000 | $7,500 | $12,500 | $25,000 | $50,000 |
| $300,000 | $9,000 | $15,000 | $30,000 | $60,000 |
| $350,000 | $10,500 | $17,500 | $35,000 | $70,000 |
| $400,000 | $12,000 | $20,000 | $40,000 | $80,000 |
| $450,000 | $13,500 | $22,500 | $45,000 | $90,000 |
| $500,000 | $15,000 | $25,000 | $50,000 | $100,000 |
| $600,000 | $18,000 | $30,000 | $60,000 | $120,000 |
Remember: the down payment is only part of your upfront cost. Closing costs add another 2–5% of the purchase price ($7,000–$17,500 on a $350,000 home). Budget for both when planning your home purchase, or use the down payment and closing cost calculator section in our tool above.
Car Down Payment Calculator: How Much Should You Put Down on a Car?
Our down payment calculator also works for car loans. Auto lenders follow different rules than mortgage lenders, and the down payment on a car affects your monthly payment, total interest paid, and your risk of being "upside down" on the loan.
How to Calculate a Car Down Payment
The formula is the same: Vehicle price × down payment percentage. For a $40,000 car with 15% down: $40,000 × 0.15 = $6,000. If you have a trade-in, its value also acts as part of your effective down payment on the new loan.
| Vehicle Price | 10% Down | 15% Down | 20% Down |
|---|---|---|---|
| $20,000 | $2,000 | $3,000 | $4,000 |
| $30,000 | $3,000 | $4,500 | $6,000 |
| $40,000 | $4,000 | $6,000 | $8,000 |
| $50,000 | $5,000 | $7,500 | $10,000 |
| $60,000 | $6,000 | $9,000 | $12,000 |
Recommended Car Down Payment Percentages
Financial experts generally recommend 20% down on a new car and 10% on a used car. The reasoning: new cars depreciate rapidly — sometimes 15–20% in the first year — so a larger down payment protects you from going underwater on the loan. For a used car, depreciation is already priced in, so a smaller down payment carries less risk.
For a more complete picture of your monthly auto payment, plug your numbers into our auto loan calculator which factors in your loan term, interest rate, and any trade-in value.
Upside-down loan warning: If you finance a vehicle with little or no down payment, you may owe more than the car is worth within months. This becomes a serious problem if you need to sell, trade in, or total the vehicle. GAP insurance can protect you financially, but a strong down payment is the better prevention.
PMI: The Hidden Cost of a Low Down Payment on a House
Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is less than 20%. It protects the lender (not you) if you default. PMI is calculated annually as a percentage of your loan balance — typically 0.5–1.5% — and added to your monthly mortgage payment.
PMI Cost Examples on a $350,000 Home
| Down Payment | Monthly PMI | Annual PMI Cost |
|---|---|---|
| 3% ($10,500) | $140–$210/mo | $1,680–$2,520 |
| 5% ($17,500) | $110–$175/mo | $1,320–$2,100 |
| 10% ($35,000) | $70–$105/mo | $840–$1,260 |
| 20% ($70,000) | NO PMI | $0 saved |
How to Remove PMI
Under the Homeowners Protection Act, lenders must automatically cancel PMI when your loan balance reaches 78% of the original purchase price (assuming you are current on payments). You can request cancellation earlier at 80% LTV. Some borrowers choose to make extra principal payments to reach this threshold faster.
An alternative is "piggyback" or 80-10-10 financing: a first mortgage for 80%, a second mortgage for 10%, and a 10% down payment — eliminating PMI entirely while putting less than 20% down. Ask your lender if this makes sense given current second mortgage rates.
How Long Does It Take to Save for a Down Payment?
The savings timeline depends entirely on your monthly savings rate and your target down payment. Here is a reference table for a $350,000 home — one of the most searched down payment scenarios:
| Monthly Savings | 3.5% ($12,250) | 10% ($35,000) | 20% ($70,000) |
|---|---|---|---|
| $500/mo | 25 mos (2.1 yrs) | 70 mos (5.8 yrs) | 140 mos (11.7 yrs) |
| $750/mo | 17 mos (1.4 yrs) | 47 mos (3.9 yrs) | 93 mos (7.8 yrs) |
| $1,000/mo | 13 mos (1.1 yrs) | 35 mos (2.9 yrs) | 70 mos (5.8 yrs) |
| $1,500/mo | 9 mos | 24 mos (2 yrs) | 47 mos (3.9 yrs) |
| $2,000/mo | 7 mos | 18 mos (1.5 yrs) | 35 mos (2.9 yrs) |
Accelerate your timeline with HYSA returns: Parking your down payment fund in a high-yield savings account earning 4.5–5% APY (typical in 2026) adds meaningful returns. On $30,000 saved, that is $1,350–$1,500 in interest per year — roughly 1–1.5 extra months of savings. Use our savings calculator to model the exact impact.
Down Payment Assistance Programs in 2026
Hundreds of programs exist at the federal, state, and local level to help buyers — especially first-time home buyers — cover their down payment and closing costs. Many buyers qualify without knowing it.
State Housing Finance Authority (HFA) Programs
Every U.S. state has an HFA offering below-market rate mortgages paired with down payment grants or forgivable second loans of 3–5% of the purchase price. Income and purchase price limits apply. Search your state name + "housing finance authority" to find current offerings.
FHA Down Payment Assistance Grants
Many states and nonprofits offer grants that cover the FHA's 3.5% minimum down payment entirely. These are true grants — not loans — and do not need to be repaid, though residency requirements often apply.
Good Neighbor Next Door (HUD)
Teachers, firefighters, EMTs, and law enforcement officers can buy HUD-owned homes in designated revitalization areas at a 50% discount off the list price. This effectively eliminates the down payment burden for qualifying professionals.
Fannie Mae HomeReady & Freddie Mac Home Possible
Both programs allow 3% down for low-to-moderate income buyers. Down payment funds can come from gifts, grants, or Community Seconds (second mortgages from nonprofits). Credit score requirements are more flexible than standard conventional loans.
VA and USDA Zero-Down Loans
VA loans are available to eligible veterans, active-duty service members, and surviving spouses — with no down payment and no PMI. USDA loans serve rural and suburban areas and also require zero down for income-eligible borrowers.
Employer Assisted Housing (EAH)
Some large employers — hospitals, universities, and corporations — offer forgivable loans or grants to help employees buy homes near work. Check your HR benefits package or ask your employer directly.
The Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Housing and Urban Development (HUD) maintain searchable databases of approved assistance programs at their official websites. Always verify program availability directly, as programs open and close throughout the year.
10 Proven Strategies to Save Your Down Payment Faster
Building a significant down payment in a reasonable timeframe requires both discipline and smart money management. These strategies have helped thousands of buyers reach their goals ahead of schedule:
Automate Your Savings
Set up an automatic transfer to a dedicated down payment account the day after each paycheck. Treating savings like a fixed bill ensures consistency and removes decision fatigue.
Use a High-Yield Savings Account
Standard savings accounts earn 0.01–0.5% APY. A high-yield savings account (HYSA) typically earns 4–5% APY in 2026. On $40,000 saved, the difference is $1,600–$2,000 per year — free money toward your goal.
Redirect Tax Refunds and Bonuses
The average U.S. tax refund exceeds $3,000. Committing windfalls — tax refunds, work bonuses, inheritances, side income — directly to your down payment fund can shave months off your timeline.
Reduce or Eliminate Rent Temporarily
Temporarily moving in with family, getting a roommate, or relocating to a lower-cost area can free up $500–$1,500/month. Even 12 months of reduced rent can add $6,000–$18,000 to your savings.
Use a Roth IRA First-Time Buyer Exception
First-time buyers can withdraw up to $10,000 in Roth IRA earnings penalty-free (after 5 years of account ownership). Roth contributions can always be withdrawn tax- and penalty-free.
Negotiate a Raise or Switch Jobs
Workers who switch jobs earn an average of 10–15% more than those who stay. A $10,000 salary increase at a 30% effective tax rate adds $7,000/year after taxes — directly usable for your down payment.
Launch a Side Income Stream
Freelancing, gig work, selling items, or monetizing a hobby can add $200–$1,000/month. See your projected take-home from side work using our 1099 tax calculator so you save the right amount for taxes.
Cut Subscription Spending
Audit your recurring subscriptions — streaming services, apps, gym memberships, meal kits. Eliminating $150–$300/month in subscriptions adds $1,800–$3,600 annually toward your home.
Ask for Gift Funds
Most loan programs allow down payment funds to come as gifts from family. A signed gift letter from the donor confirms the money does not need to be repaid. This is legal and common for first-time buyers.
Explore Down Payment Savings Challenges
52-week savings challenges, bi-weekly saving plans, or "no-spend month" challenges can accelerate progress and create motivation. Tracking your progress visually makes the goal feel more attainable.
When Should You Buy vs. Wait for 20% Down?
The "wait for 20%" advice is not universally correct. The right answer depends on your local housing market, financial situation, and opportunity cost. Here is how to think through it:
Consider Buying With Less Than 20%
- • Home prices in your area are rising faster than you can save
- • Your monthly payment would be similar to (or less than) current rent
- • You plan to stay in the home 5+ years
- • Rates are stable or falling and you can lock a favorable rate now
- • You qualify for a down payment assistance program
- • Your emergency fund remains intact after the purchase
- • You have strong job security and stable income
Consider Waiting for a Larger Down Payment
- • Home prices are flat or declining in your target area
- • Buying now would drain your emergency fund
- • Your income or employment situation is unstable
- • You're less than 12 months from reaching 20%
- • PMI + higher payment would cause monthly financial strain
- • You may need to move within 3–5 years
- • Interest rates are very high and expected to fall
A quick way to frame the decision: calculate the cost of renting for one more year (total rent paid) versus the cost of buying now with PMI (total PMI over one year + any price appreciation you would gain). If buying still wins on paper and your finances are stable, low down payment options deserve serious consideration.
Use our rent vs. buy calculator to model this comparison with your specific numbers — factoring in home price appreciation, rent increases, PMI, tax deductions, and investment opportunity cost.
FHA Down Payment Calculator: What You Need to Know for 2026
FHA loans are among the most popular options for first-time buyers due to their flexible credit requirements. Here is the complete picture for 2026:
VA Loan Down Payment Calculator: Zero Down for Veterans
VA loans are arguably the best mortgage product available to eligible Americans. There is no down payment requirement, no PMI, and rates are typically 0.25–0.5% lower than conventional loans. The VA funding fee (1.25–3.3% of the loan amount, depending on service history and down payment) can be financed into the loan.
If you choose to make a down payment on a VA loan, putting 5% down reduces the VA funding fee. Putting 10% down reduces it further. Run scenarios with the calculator above to see whether the funding fee savings outweigh the opportunity cost of the down payment.
Down Payment and Closing Costs: Calculating Your Total Cash Needed
Many buyers are surprised to discover they need more cash at closing than just the down payment. Closing costs typically add 2–5% of the purchase price and are due the same day as your down payment. On a $350,000 home:
| Down Payment % | Down Payment | Closing Costs (est.) | Total Cash Needed |
|---|---|---|---|
| 3.5% (FHA) | $12,250 | $7,000–$12,000 | $19,250–$24,250 |
| 5% | $17,500 | $7,000–$12,000 | $24,500–$29,500 |
| 10% | $35,000 | $7,000–$12,000 | $42,000–$47,000 |
| 20% | $70,000 | $7,000–$12,000 | $77,000–$82,000 |
Some sellers agree to pay a portion of your closing costs as a concession — especially in buyer's markets. Ask your real estate agent about seller concessions and lender credits as strategies to reduce your total cash needed.
Explore More Financial Calculators
Once you know your down payment target, plan the rest of your financial picture with these free tools from USA Salary Tools:
Editorial Disclaimer
The information on this page is for educational and planning purposes only. Down payment requirements, PMI thresholds, loan limits, and assistance program eligibility change regularly. Always consult a licensed mortgage professional or HUD-approved housing counselor before making any home purchase decision. USA Salary Tools is not a licensed lender, financial advisor, or real estate agent. Data sourced from FHFA, FHA, VA, IRS, and CFPB guidelines current as of May 2026.