Down Payment Calculator

What is a Down Payment?

A down payment is the upfront cash you pay toward the purchase of a home or vehicle, reducing the amount you need to borrow. For a $400,000 home with a 20% down payment, you would pay $80,000 upfront and finance the remaining $320,000 with a mortgage.

The down payment percentage matters significantly. A 20% down payment on a home eliminates the need for Private Mortgage Insurance (PMI), which typically costs 0.5–1.5% of the loan amount annually. With less than 20% down, most conventional lenders require PMI until you reach 20% equity. FHA loans allow as little as 3.5% down but carry their own mortgage insurance premiums.

For a vehicle, a larger down payment (10–20%) reduces the loan amount, lowers monthly payments, and helps you avoid being "underwater" — owing more than the car is worth. Regardless of what you're buying, saving a meaningful down payment signals financial readiness and saves thousands in long-term interest costs.

Down Payment Savings Formula

This calculator uses the future value of an annuity formula to determine how long your savings will take to reach your goal:

• r — Monthly interest rate (Annual Rate ÷ 12 ÷ 100).
• Balance₀ — Your current savings balance.
• Monthly Savings — Amount added each month.
• The calculator iterates month by month until the balance reaches the goal.

Example: Saving $80,000 at 4.5% Interest

You need an $80,000 down payment (20% of a $400,000 home). Here's how long it takes with different monthly savings amounts at 4.5% annual interest:

Notice that a higher starting balance dramatically reduces the time needed. Depositing your down payment savings into a high-yield savings account (HYSA) at 4–5% APY earns meaningful interest — thousands of dollars over a multi-year savings journey.

At 4.5% annual interest compounded monthly. For illustrative purposes only.