How to use this calculator
Set the home price you're targeting and slide the down payment percentage. The cash target updates instantly, including an estimated 3% of the price for closing costs, which is easy to overlook when planning.
- Current savings: what you've already set aside for the purchase.
- Monthly saving amount: what you can add each month from here on.
- Interest on savings: the rate your money earns while parked (a high-yield savings account, for instance). It shortens the runway more than you'd think over multi-year horizons.
The options table compares the standard down payment tiers from 3% to 25% at your price, marking where PMI applies, so you can weigh a faster purchase against a cheaper loan.
How much down is actually required
The 20% figure is a threshold, not a requirement. Conventional loans commonly go to 3–5% down, FHA to 3.5% (at qualifying credit scores), and VA/USDA to zero for eligible borrowers. What 20% buys you is freedom from private mortgage insurance and a smaller, cheaper loan, so the real decision is not "can I reach 20%?" but "what does each tier cost me in time, cash and monthly expense?"
On the default $350,000 home, 20% down is $70,000. Add roughly $10,500 of closing costs (estimated at 3% of the price: lender fees, title, escrow, prepaid taxes) and the true cash target is $80,500. Starting from $20,000 in savings and adding $800/month at 4% interest, that target is about 63 months away, or five and a quarter years. Without the 4% interest working alongside you it would take 76 months; the yield trims 13 months off the runway.
Compare the tiers: 5% down needs $28,000 of modeled cash (about 10 months away on the same plan) but leaves a $332,500 loan and may involve mortgage insurance. Waiting for 20% takes roughly four additional years under these inputs, while prices, rates and rents may change during that time. Use the table to compare the timing and loan size rather than treating one percentage as the right answer for everyone.
For a down payment needed on a fixed date, consider how much short-term loss you could tolerate. This calculator models steady interest, not market volatility, so use a rate that matches the savings or deposit product you plan to hold.
Formula and methodology
The cash target is assembled first, then the runway is solved from compound growth with monthly deposits:
d%down payment percentage; 3% is the closing-cost assumptionS₀current savings,Amonthly saving amountrmonthly interest = savings rate ÷ 12nmonths to target — the smallest n satisfying the inequality
The calculator simulates month by month (deposit after interest) and reports the first month the balance reaches the target, then converts it to a calendar date. If your savings already cover the target, the runway is zero and the result reads "Ready now". The loan that results is simply Price − Down.
Worked example
Down payment = 350,000 × 20% = $70,000. Closing costs ≈ 350,000 × 3% = $10,500. Total cash target = $80,500.
Starting from $20,000: each month the balance grows by 4%/12 and $800 is added. The balance first reaches $80,500 in month 63, about 5 years 3 months, landing around October 2031 from a July 2026 start.
The resulting mortgage is $280,000 with no PMI. At 10% down instead, the target drops to $45,500 (29 months away), but the $315,000 loan would carry PMI until 20% equity builds.
What changes the result
- The percentage. Each 5% of a $350,000 price is $17,500 of cash: on an $800/month plan, roughly 16–19 months of saving per tier, slightly less at each step as interest compounds. The slider makes this trade visible immediately.
- Closing costs. In the US, typically 2–5% of the price; this tool assumes 3%. They're due in cash at the same moment as the down payment, which is why targets that ignore them get missed.
- Savings yield. At 4% on multi-year horizons the interest contribution is material: 13 months faster on the default plan versus earning nothing.
- PMI at under 20%. Not a reason to panic: PMI commonly runs roughly 0.3–1.5% of the loan per year depending on credit and loan-to-value, and can be removed on request at 20% equity (terminating automatically at 22%). Sometimes buying sooner with PMI beats renting for four more years, and the rent vs buy calculator quantifies that.
Assumptions and limitations
- Closing costs are a flat 3% planning assumption. Actual costs vary by location, lender, property and loan type; replace the estimate with the itemized figure supplied for your transaction.
- The home price is held constant over your saving runway. In rising markets the target moves as you approach it, so consider re-running with an inflated price for long horizons.
- Savings interest is treated as untaxed; in a taxable account your effective rate is somewhat lower.
- Program-specific minimums (FHA 3.5%, VA 0%) and first-time-buyer assistance are not modeled; the tiers table uses conventional-loan conventions.
- PMI cost itself isn't computed here; the mortgage calculator prices it into the monthly payment.
Sources and references
- CFPB: Loan options — official overview of conventional, FHA, VA and USDA programs and their down-payment characteristics.
- CFPB: What kind of down payment do I need? — how the down-payment amount affects loan terms and program minimums.
- VA: Home loan programs — eligibility for zero-down VA-backed loans.
- CFPB: What fees are paid when closing on a mortgage? — basis for the US closing-cost range used in this tool.
- CFPB: When can I remove PMI? — the request-at-20%-equity and automatic-termination rules referenced on this page.
Frequently asked questions
Do I really need 20% down to buy a house?
No. Conventional programs accept 3–5% down, FHA takes 3.5%, and VA/USDA lend at 0% to eligible borrowers. 20% is the point where PMI no longer applies on a conventional loan, and lower loan-to-value can also improve pricing. The table on this page shows the cash and loan consequences of each tier at your price, so you can decide with numbers rather than folklore.
What closing costs should I expect on top of the down payment?
Lender origination, appraisal, title insurance, escrow deposits and prepaid taxes/insurance in the US run typically 2–5% of the purchase price, due in cash at closing. This calculator assumes 3% ($10,500 on the default price). Sellers sometimes credit part of it in negotiation, and some lenders offer credits in exchange for a higher rate.
Where should down payment savings live while I save?
Savers with a fixed 2–5 year target commonly hold principal-stable vehicles such as high-yield savings, money-market funds and short CDs, because an equity drawdown of 20% in the year of purchase would set a fixed-date plan back years. This calculator models steady interest, which matches those vehicles rather than market volatility, so use a rate from the product you would hold.
Is it better to buy sooner with 5% down or wait until I have 20%?
On the default plan the difference is about four years of saving. Buying sooner means PMI and a bigger loan, but also starting equity and locking a price; waiting means cheaper financing but four more years of rent and market risk in both directions. Run the rent vs buy calculator for the waiting years; it's the same trade viewed from the other side.
Does the calculator account for my savings earning interest?
Yes. The runway is computed with monthly compounding at the rate you enter, deposits added each month. On the defaults this shortens the path to the $80,500 target from 76 months (no interest) to 63. Set the rate to zero if you'd rather plan without counting on yield.