The basic formula: multiply the home price by your down payment percentage

To calculate your down payment, take the purchase price of the home and multiply it by the percentage you plan to put down. If you are buying a house for $300,000 and want to put down 20 percent, your down payment is $300,000 × 0.20 = $60,000. The remaining $240,000 would be borrowed through a mortgage.

The percentage you choose depends on what you can afford to save, what your lender requires, and what trade-offs you are willing to make. A larger down payment means a smaller loan, lower monthly payments, and no mortgage insurance. A smaller down payment means you keep more cash on hand but pay more interest over time and may face additional fees.

Key Takeaways

  • Down payment = home price × down payment percentage (expressed as a decimal).
  • Common down payment amounts are 3 percent, 5 percent, 10 percent, and 20 percent, each with different loan requirements and costs.
  • You must also budget for closing costs, which typically run 2 to 5 percent of the home price and are separate from your down payment.
  • Lenders set minimum down payment requirements based on the loan type, and going below 20 percent usually triggers mortgage insurance premiums.
  • Your total cash needed at closing is your down payment plus closing costs, not just the down payment alone.

How down payment percentage affects your loan amount

The down payment percentage you choose directly determines how much you borrow. A 5 percent down payment on a $300,000 home is $15,000, leaving you to finance $285,000. A 20 percent down payment on the same home is $60,000, leaving you to finance $240,000. The difference in your monthly mortgage payment can be several hundred dollars.

Lenders typically offer these common percentages: 3 percent (often for first-time buyers), 5 percent, 10 percent, and 20 percent. Each tier has different requirements. A 3 percent down payment requires an FHA loan or a conventional loan with mortgage insurance. A 20 percent down payment is the threshold where mortgage insurance is no longer required on a conventional loan, which saves you money over the life of the loan.

Closing costs are separate from your down payment

Your down payment is not the only money you need at closing. You must also pay closing costs, which include appraisal fees, title insurance, attorney fees, loan origination fees, and property taxes. Closing costs typically range from 2 to 5 percent of the home price, though the exact amount varies by location and lender.

If you are buying a $300,000 home with a 20 percent down payment ($60,000) and closing costs are 3 percent ($9,000), your total cash needed at closing is $69,000. Many buyers underestimate this figure and run short of funds. Ask your lender for a Loan Estimate within three days of submitting your application — it will show you the exact closing costs you will owe.

How to work backward from the cash you have available

If you know how much cash you have saved, you can work backward to find what down payment percentage you can afford. Subtract your estimated closing costs from your total savings, then divide the remainder by the home price. The result is your down payment percentage.

For example: you have $80,000 saved, closing costs are estimated at $9,000, and you are looking at homes around $300,000. Your available down payment is $80,000 − $9,000 = $71,000. Divide by the home price: $71,000 ÷ $300,000 = 0.237, or about 24 percent. This tells you that you can afford a 24 percent down payment on a $300,000 home, or you could put down 20 percent and have $11,000 left over for emergencies.

Minimum down payment requirements by loan type

Different loan programs have different minimum down payment requirements. Conventional loans typically require a minimum of 3 to 5 percent down, though some lenders offer 3 percent programs. FHA loans require 3.5 percent down. VA loans (for military members and veterans) often require zero down. USDA loans (for rural properties) also often require zero down.

Your credit score, debt-to-income ratio, and savings history affect whether you may have access to for the minimum. A lender may require 10 or 15 percent down if your credit score is lower or your debt is high, even if the loan program technically allows 3 percent. Ask your lender what minimum they will accept for your specific situation before you commit to a home price.

The cost of mortgage insurance when you put down less than 20 percent

If your down payment is less than 20 percent on a conventional loan, you will pay private mortgage insurance (PMI). PMI protects the lender if you default, but you pay the premium. PMI typically costs 0.5 to 1.5 percent of your loan amount per year, added to your monthly mortgage payment.

On a $285,000 loan (5 percent down on a $300,000 home), PMI might cost $1,425 to $4,275 per year, or roughly $120 to $360 per month. You can remove PMI once you have paid down the loan to 80 percent of the original home value, which usually takes 5 to 10 years depending on your payment schedule and home appreciation. FHA loans charge mortgage insurance for the life of the loan if you put down less than 10 percent, making the long-term cost higher.

Using a down payment calculator to check your math

Many lenders and financial websites offer free down payment calculators. You enter the home price, your down payment percentage, and sometimes your credit score and loan type, and the calculator shows you the down payment amount, loan amount, estimated monthly payment, and PMI cost if applicable. These tools are useful for comparing scenarios — for example, seeing how much your payment drops if you increase your down payment from 5 percent to 10 percent.

A calculator cannot predict your exact closing costs or interest rate, which vary by lender and market conditions. Use it to understand the relationship between down payment size and monthly payment, then confirm the numbers with a real lender before you make an offer on a home.

Frequently Asked Questions

Can I use a gift from family toward my down payment?

Yes, most lenders allow down payment gifts from family members. You will need a signed gift letter stating that the money is a gift, not a loan, and that the family member has no expectation of repayment. The lender will verify the source of the funds in the giver's bank account. Some loan programs limit how much of your down payment can be a gift; conventional loans often allow 100 percent gift funds, while FHA loans may require you to contribute at least some of your own money.

What if I want to put down more than 20 percent?

You can put down any amount above 20 percent. A larger down payment lowers your loan amount, reduces your monthly payment, and saves you interest over the life of the loan. However, consider whether keeping extra cash in savings for emergencies or investing it elsewhere might serve you better than putting it all into the home. A financial advisor can help you weigh the trade-offs.

Does my down payment percentage affect my interest rate?

Yes, typically. Lenders often offer lower interest rates to borrowers who put down 20 percent or more, because the lender's risk is lower. A borrower with a 5 percent down payment may pay a higher interest rate than one with a 20 percent down payment, even if both have the same credit score. Ask your lender for rate quotes at different down payment levels to see the difference.

What happens if I do not have enough for closing costs?

Some lenders allow sellers to contribute toward your closing costs as part of the purchase agreement. The seller contribution is typically capped at 2 to 6 percent of the home price, depending on the loan type. You can also ask the seller to cover specific costs like title insurance or property taxes. This reduces the cash you need to bring to closing, though it may affect your negotiating power on the purchase price.