Estimate Down-payment Required for a Home Loan to Secure a Fixed Monthly Payment Amount

# Mortgage Down-payment Calculator

We offer 2 down-payment calculators.

• Basic down-payment calculator: quickly calculates down-payment ranges for common down-payment amounts & states what percent of a purchase a specified down-payment represents. This calculator does not include closing costs, which typically ranges between 2% to 5% of the home's purchase price.
• Renter budget equivalent calculator: given a monthly budget this calculator can be used to quickly estimate what size down-payment will be needed to be able to afford a set fixed monthly mortgage payment amount. By default this tool presumes the home buyer will add the closing costs to their down-payment, so the amount shown in each down-payment amount includes the closing cost.

## Basic Down-payment Calculator

Home Price
Downpayment (optional)

### Loan Amount

Based on Your Above Entered Downpayment
% Down
Is PMI required for the above down-payment amount?
Ninteyseven 3
3% Down
FHA
3.5% Down
Conforming
5% Down
80/10/10 Piggyback Mortgage
10% Down
15% Down
15% Down
No PMI Payments
20% Down

## Estimate Down-payment Based on Monthly Budget

 Monthly payment: APR (%): Loan term (years): Annual property taxes: Annual home insurance: Closing cost:
 Down (%) Down (\$) Max loan amount Max home price 20% 15% 10% 5% 3% 0%

## Median Home Prices & Common Down-payment Amounts Across the US

Here are a range of down-payment amounts for median homes across the country. The average amount financed is 90%, so the average down-payment on a median existing home is \$23,600 while the average down-payment on a median new home is \$38,820. Closing costs are not included in these figures.

 March 2017 Price 3% 5% 10% 15% 20% Median Existing Home \$236,400 \$7,092 \$11,820 \$23,640 \$35,460 \$47,280 Median Existing Single-Family Home \$237,800 \$7,134 \$11,890 \$23,780 \$35,670 \$47,560 Median Existing Condos & Co-ops \$224,700 \$6,741 \$11,235 \$22,470 \$33,705 \$44,940 Median Existing West Home \$347,500 \$10,425 \$17,375 \$34,750 \$52,125 \$69,500 Median Existing Northeast Home \$260,800 \$7,824 \$13,040 \$26,080 \$39,120 \$52,160 Median Existing South Home \$210,600 \$6,318 \$10,530 \$21,060 \$31,590 \$42,120 Median Existing Midwest Home \$183,000 \$5,490 \$9,150 \$18,300 \$27,450 \$36,600 Median New Home * \$315,100 \$9,453 \$15,755 \$31,510 \$47,265 \$63,020 Average New Home * \$388,200 \$11,646 \$19,410 \$38,820 \$58,230 \$77,640

Sources: * Census.gov, all others NAR

## Quickly Estimating Down-payments

Rules of thumb for quickly estimating down-payment amounts:

• 10% down: remove the far right number from the home's price
• 20% down: take the 10% number & double it
• 5% down: take the 10% number & divide it by 2

The above rules of thumb will skew slightly low because they do not include closing costs, which typically run between 2% to 5% of the home purchase price.

## How Much Money Should I Save for a House?

The more you can afford to put down on a house the less capital will accumulate interest. Further, outside of saving on interest payments, there is another benefit for putting down at least 20%.

For a standard conforming mortgage, it is ideal to put at least 20% down on the loan. Loans which have less than 20% down-payment have a loan-to-value (LTV) above 80% & are required to carry property mortgage insurance (PMI), which is an additional expense paid by the home buyer to insure the lender will get paid in case the homeowner can not make payments. These insurance payments must be made until the LTV falls below 80% & are automatically removed when the LTV falls to 78%.

PMI ranges from 0.3% to 1.5% of the initial loan amount, with the consumer's credit score & the down-payment amount factoring into the rate.

### Piggyback Mortgages

Some buyers may apply for a second mortgage to help pay part of their down-payment & remove PMI insurance requirements. This loan format is often referred to as a "piggyback loan," where a borrower pays 10% down on the home & uses the second mortgage for the next 10% down to avoid PMI payments.

### Example Monthly PMI Costs

Here is a chart of estimated monthly PMI costs based on a rate of 0.55%.

 March 2017 Price 3% down 5% down 10% down 15% down 20% down Median Existing Home \$236,400 \$105 \$103 \$98 \$92 \$0 Median Existing Single-Family Home \$237,800 \$106 \$104 \$98 \$93 \$0 Median Existing Condos & Co-ops \$224,700 \$100 \$98 \$93 \$88 \$0 Median Existing West Home \$347,500 \$154 \$151 \$143 \$135 \$0 Median Existing Northeast Home \$260,800 \$116 \$114 \$108 \$102 \$0 Median Existing South Home \$210,600 \$94 \$92 \$87 \$82 \$0 Median Existing Midwest Home \$183,000 \$81 \$80 \$75 \$71 \$0 Median New Home * \$315,100 \$140 \$137 \$130 \$123 \$0 Average New Home * \$388,200 \$173 \$169 \$160 \$151 \$0

Sources: *Census.gov, all others NAR

### PMI Payments, 30 Year Conventional Mortgage

Years to build 22% equity (& remove PMI payments) for a 30 year conforming loan, based on down-payment amount & loan interest rate.

 Down-payment 0% 5% 10% 15% APR Years of PMI payments 3% 8.5 7.5 6 4 4% 9.5 8.5 6.5 4.5 5% 10.5 9.5 7.5 5 6% 11.5 10.5 8.5 5.5 7% 12.5 11.5 9 6.5 8% 13.5 12 10 7 9% 14.5 13.5 11 8 10% 15.5 14.5 12 9

### PMI Payments, 15 Year Conventional Mortgage

Years to build 22% equity (& remove PMI payments) for a 15 year conforming loan, based on down-payment amount & loan interest rate.

 Down-payment 0% 5% 10% 15% APR Years of PMI payments 3% 3.5 3 2.5 1 4% 4 3.5 2.5 1.5 5% 4 3.5 2.5 1.5 6% 4 4 3 2 7% 4.5 4 3.5 2 8% 5 4.5 3.5 2.5 9% 5 4.5 3.5 2.5 10% 5 5 3.5 2.5

If the value of your home increases significantly during the loan, you may be able to get PMI removed quicker than shown in the above charts if the bank recognizes the increased value of your home. To do so, you will have to contact your lender when your LTV is below 80% to request the removal of PMI.

## Can You Buy a Home With Low (or No) Money Down?

It is possible to buy a home with little or no money down, however the ability to do so depends on how tight lending standards are, the background of the applicant & the credit quality of the applicant. Some programs are available exclusively to military members, low income communities & first time home buyers.

### Conventional 97 Mortgages

Typical banks want at least a 3% down-payment & PMI to insure loans. Loans with a 3% down-payment are called Conventional 97 mortgages.

Fannie Mae has approved mortgage lenders to offer a HomeReady lending program that only requires a 3% down-payment. The program can be used by first-time & repeat home buyers to finance or refinance a home in lower-income & minority-heavy areas. The minimum credit score for HomeReady loan qualification is 620.

Freddie Mac offers 2 low down-payment mortgage options.

Their Home Possible program requires a 5% down-payment & can be used on most types of property using a variety of fixed & adjustable rate loan terms.

Home Possible Advantage requires a 3% down-payment, but can allow up to 105% financing when combined with a second mortgage. These can only be applied to fixed-rate mortgages on primary residences.

### Federal Loan Programs

Some federal loan programs may come with the ability to buy a home with little to no money down.

• VA loans do not charge PMI & do not require a down-payment. Active duty military members and veterans are able to access competitive mortgage rates where the loans are insured by the federal government.
• The USDA's Rural Development loans do not require a down-payment.
• FHA loans typically have a large upfront fee rolled into the loan if the buyer either chooses a 15 year loan or puts less than 22% down on the loan. This fee can be more expensive than PMI, but can save borrowers with poor credit profiles significant money. And after the loan has been regularly paid for years a borrower could choose to refinance into a regular conforming mortgage. FHA loans allow credit scores as low as 500 & only requires a 3.5% down-payment.

## What is the Average Down-payment on a House?

All-cash buyers represent a small segment of the overall home buying market.

Traditionally most home buyers in the United States have financed their home purchases. According to the National Association of Realtors, in 2016, 88% of home buyers used mortgage financing.

Before many cash-rich buyers from China & other countries purchased escape hatch homes the percent of buyers leveraging financing has historically ranged between 92% & 93%.

### Loan Product

A big part of what controls the average down-payment largely comes down to what loan programs are popular at the time. For example, in 2013 the FHA significantly increased fees associated with their loan programs, which in turn has made conventional mortgage loans relatively more attractive & increased the market-share of conventional loans.

Here is the breakdown of buyers by financing type.

 Mortgage Type % of buyers in 2016 fixed 92% adjustable 8% conventional 59% FHA 24% VA 12%

### Demographic Mortgage Data

 Generation Used Financing Down-payment Amount Financed Gen Y 98% 7% 93% Gen X 96% 10% 90% Baby Boomers 76% 17% 83% Silent Generation 58% 22% 78% Overall 88% 10% 90%

While a 20% down-payment is a popular benchmark, some borrowers can borrow up to 97% of a home's value with property mortgage insurance, while others leverage federal programs with no down-payment requirements. One of the primary determinants of the percent financed is how old the home buyer is. Here are 2016 home financing statistics based on the age of the home buyer.

 All Buyers < 37 37 - 51 52 - 61 62 to 70 71 to 91 Less than 50% 9% 6% 5% 10% 19% 20% 50% to 59% 4 1 4 3 7 11 60% to 69% 4 2 4 5 10 11 70% to 79% 11 8 12 15 14 16 80% to 89% 23 24 24 25 16 22 90% to 94% 14 18 15 9 10 2 95% to 99% 21 26 23 17 10 6 100% – Financed entire purchase 14 15 12 13 15 14 Median percent financed 90% 93% 90% 86% 81% 76%

### Time required to save for down-payment

 All Buyers < 37 37 - 51 52 - 61 62 to 70 71 to 91 < 6 months 40% 38% 39% 48% 47% 58% 6 - 12 months 15 18 14 9 8 6 12 to 18 months 9 10 10 7 4 3 18 to 24 months 7 8 8 4 4 2 over 2 years 29% 24% 27% 30% 35% 31%

### Lender Rejections of Borrowers

 All Buyers < 37 37 to 51 52 to 61 62 to 70 71 to 91 Have had application denied 5% 5% 6% 7% 3% 4% Median number of times application was denied 1 1 1 1 1 2 Debt to income ratio 15% 18% 20% 13% 9% 7% Low credit score 14 14 22 16 3 3 Income was unable to be verified 6 4 12 10 3 7 Not enough money in reserves 4 3 7 3 1 6 Insufficient downpayment 3 4 4 4 3 Too soon after refinancing another property 2 1 2 6 4 Other 54 60 36 57 68 67