Calculate down payment amounts, determine affordable home prices, or find down payment percentages. Includes closing costs, PMI calculations, and loan type requirements.
A down payment is the upfront portion of a home purchase that you pay out of pocket. The remaining balance becomes your mortgage loan. Down payments are typically expressed as a percentage of the home's purchase price, and the amount required varies significantly based on loan type, lender requirements, and your financial profile.
Understanding down payment requirements and total upfront costs is crucial for successful home buying. Beyond the down payment, you'll need additional funds for closing costs, inspections, and other fees that can add thousands to your upfront expenses.
Loan Type | Minimum Down Payment | Typical Range | Best For |
---|---|---|---|
Conventional | 3% | 3-20% | Good credit, stable income |
FHA | 3.5% | 3.5-10% | Lower credit scores, first-time buyers |
VA | 0% | 0-10% | Veterans and service members |
USDA | 0% | 0-5% | Rural properties, income limits |
Jumbo | 10% | 10-30% | High-value properties |
Traditional benchmark for avoiding mortgage insurance
PMI required but manageable monthly payments
Lower upfront cost but higher monthly payments
Cost Category | Typical Amount | Who Pays | Description |
---|---|---|---|
Loan Origination | 0.5-1% of loan | Buyer | Lender processing fee |
Appraisal | $300-$700 | Buyer | Property valuation |
Home Inspection | $300-$600 | Buyer | Property condition assessment |
Title Insurance | 0.5-1% of loan | Varies | Ownership protection |
Attorney Fees | $500-$1,500 | Buyer | Legal representation |
Recording Fees | $50-$500 | Buyer | Government filing fees |
When Required: Conventional loans with less than 20% down payment
Cost: Typically 0.3% to 1.9% of loan amount annually
Removal: Can be cancelled when loan balance reaches 78-80% of home value
Types: Monthly premium, upfront premium, or combination
Down Payment | Typical PMI Rate | Monthly PMI on $300K Loan |
---|---|---|
3% | 0.8-1.9% | $200-$475 |
5% | 0.6-1.5% | $150-$375 |
10% | 0.3-1.0% | $75-$250 |
15% | 0.3-0.8% | $75-$200 |
Source | Pros | Cons | Documentation Required |
---|---|---|---|
Personal Savings | No debt, full ownership | Takes time to accumulate | Bank statements |
Gift from Family | No repayment required | May require gift letter | Gift letter, bank records |
401(k) Loan | Access to retirement funds | Reduces retirement savings | Loan documentation |
Home Sale Proceeds | Large amount available | Must sell current home first | Settlement statement |
Down Payment Assistance | Reduces out-of-pocket cost | Income/location restrictions | Program requirements |
Generally Acceptable:
Personal savings, checking/savings accounts, CDs, money market accounts, investment account proceeds (with proper seasoning), gift funds from family, employer assistance programs, proceeds from sale of assets
Generally Not Acceptable:
Personal loans, credit card cash advances, borrowed funds from friends, recent large deposits without explanation, cryptocurrency (in most cases), unseasoned funds
Example: $320,000 loan ÷ $400,000 home = 80% LTV
LTV Ratio | Down Payment | Risk Level | Interest Rate Impact |
---|---|---|---|
95-97% | 3-5% | High | Higher rates + PMI |
90-95% | 5-10% | Moderate-High | Standard rates + PMI |
80-90% | 10-20% | Moderate | Good rates + PMI |
≤80% | 20%+ | Low | Best rates, no PMI |
Credit Score Range | Conventional Min Down | FHA Min Down | Interest Rate Impact |
---|---|---|---|
760+ | 3% | 3.5% | Best rates available |
700-759 | 3% | 3.5% | Good rates |
640-699 | 5% | 3.5% | Standard rates |
580-639 | 10%+ | 3.5% | Higher rates |
500-579 | Not eligible | 10% | Highest rates |
Cost Type | Typical Amount | When Paid |
---|---|---|
Earnest Money | 1-3% of home price | With offer (applied to down payment) |
Home Inspection | $300-$600 | After offer acceptance |
Appraisal | $300-$700 | During loan process |
Moving Costs | $800-$2,500 | Around closing |
Immediate Repairs | Variable | After closing |
Utility Deposits | $100-$500 | Before/after closing |
Market Conditions: In competitive markets, larger down payments make offers more attractive
Interest Rate Environment: Rising rates may favor lower down payments to preserve cash
Personal Finance: Maintain emergency fund and avoid depleting all savings
Investment Opportunities: Consider if money could earn more invested elsewhere