1. What is a Down Payment?

A down payment is the initial upfront portion of the total amount due when purchasing a home. It's typically expressed as a percentage of the home's purchase price and paid at closing.

2. How Down Payment Calculation Works

The calculator uses the simple formula:

Where:

• Home Price — Total purchase price of the property
• Percentage — The down payment percentage required (e.g., 20%)

Example: For a $300,000 home with 20% down payment: $300,000 × 0.20 = $60,000

3. Importance of Down Payment

Details: A larger down payment reduces your loan amount, may eliminate private mortgage insurance (PMI), and can result in better interest rates and lower monthly payments.

4. Using the Calculator

Tips: Enter the home price in dollars and the down payment percentage. Common percentages are 3.5% (FHA loans), 10%, or 20% (conventional loans).

5. Frequently Asked Questions (FAQ)

Q1: What's the minimum down payment required?
A: Typically 3-5% for conventional loans, 3.5% for FHA loans, but 20% avoids PMI.

Q2: Can down payment be gifted?
A: Yes, for many loan types, but documentation is required to prove it's a gift not a loan.

Q3: Does down payment affect interest rates?
A: Generally, larger down payments may qualify you for better interest rates.

Q4: Are there down payment assistance programs?
A: Yes, many local and national programs help first-time homebuyers with down payments.

Q5: How does down payment affect monthly payments?
A: Larger down payments reduce both the principal amount and often the interest rate, lowering monthly payments.