1. What is a Down Payment?

A down payment is the initial upfront portion of the total purchase price that a buyer pays when purchasing a home. For first-time home buyers, this is typically a percentage of the home's purchase price.

2. How Down Payment Calculation Works

The calculator uses the simple formula:

Where:

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

Explanation: The calculation converts the percentage to a decimal fraction of the home price to determine the actual dollar amount needed.

3. Importance of Down Payment

Details: The down payment affects your mortgage amount, interest rates, and whether you'll need private mortgage insurance (PMI). A larger down payment generally means better loan terms.

4. Using the Calculator

Tips: Enter the home price in dollars and the required down payment percentage. Typical down payments range from 3.5% (FHA loans) to 20% (conventional loans).

5. Frequently Asked Questions (FAQ)

Q1: What's the minimum down payment for first-time buyers?
A: It varies by loan type: 3.5% for FHA loans, 3% for conventional loans (with certain programs), and 0% for VA loans (for eligible veterans).

Q2: How does down payment affect mortgage insurance?
A: Generally, putting less than 20% down requires mortgage insurance, which protects the lender if you default on the loan.

Q3: Can down payment come from gifts?
A: Yes, many loan programs allow gift funds for down payments, but documentation is required to show the money isn't a loan.

Q4: Are there down payment assistance programs?
A: Many states and local governments offer assistance programs for first-time home buyers with low-to-moderate incomes.

Q5: Should I put down more than the minimum?
A: While a larger down payment reduces your loan amount and monthly payments, consider keeping some savings for emergencies and closing costs.