Down Payment Calculator

Loan Payment after Down Payment Calculator

Down Payment Formula

Formula

\[ D = L \times \frac{d}{100} \] \[ P = L - D \] \[ M = \frac{P \times r}{1 - (1 + r)^{-n}} \]

Where:

$L$ — total loan (purchase) amount
$d$ — down payment percentage
$D$ — down payment amount
$P$ — loan principal remaining after the down payment
$r$ — monthly interest rate (annual rate divided by 12)
$n$ — total number of monthly payments (term in years × 12)
$M$ — fixed monthly payment

The first two lines compute the cash you pay upfront and the amount you borrow. The third line is the standard amortizing-loan formula, which gives the fixed monthly payment that fully repays the principal plus interest over the term.

Down Payment – Calculation Example

Example: you are buying a home for $300,000 with a 30-year loan at a 5% annual interest rate, and you want to compare putting 3% down versus 20% down.

\[ r = \frac{5\%}{12} = 0.0041667, \quad n = 30 \times 12 = 360 \]

With a 3% down payment:

\[ D = 300{,}000 \times 0.03 = 9{,}000 \]

\[ P = 300{,}000 - 9{,}000 = 291{,}000 \]

\[ M = \frac{291{,}000 \times 0.0041667}{1 - (1.0041667)^{-360}} \approx 1{,}562.15 \]

With a 20% down payment:

\[ D = 300{,}000 \times 0.20 = 60{,}000 \]

\[ P = 300{,}000 - 60{,}000 = 240{,}000 \]

\[ M = \frac{240{,}000 \times 0.0041667}{1 - (1.0041667)^{-360}} \approx 1{,}288.37 \]

Result: a 3% down payment requires $9,000 upfront and a monthly payment of about $1,562.15, while a 20% down payment requires $60,000 upfront but lowers the monthly payment to about $1,288.37 — a savings of roughly $273.78 per month.

How to Use the Calculator

Enter the Loan Amount — the full purchase price or total amount you plan to finance before any down payment.
Enter the Interest Rate — the annual rate your lender quoted, as a percentage (for example, 5 for 5%).
Enter the Term (years) — the length of the loan, such as 30 for a 30-year mortgage or 5 for a 5-year auto loan.
Review the results table. It shows the upfront down payment and the resulting monthly payment for seven scenarios: 0%, 1%, 3%, 5%, 10%, 15%, and 20% down.
Compare the rows to see how each additional dollar upfront reduces your monthly obligation, then adjust the inputs to test other rates or terms.

What Is a Down Payment and Why Does It Matter?

A down payment is the portion of a purchase price you pay in cash upfront, with the remainder financed through a loan. For a mortgage, the loan amount you enter in this calculator represents the home price; each scenario subtracts the down payment from that price to find the principal you will actually borrow. Because interest is charged on the principal, a larger down payment reduces both your monthly payment and the total interest you pay over the life of the loan.

The table makes the trade-off explicit: putting more money down costs you more liquidity today but permanently lowers your monthly obligation. For a $300,000 home at 5% over 30 years, moving from 3% down to 20% down saves nearly $275 per month and cuts the total interest paid by tens of thousands of dollars. This is why many financial advisors suggest saving toward at least a 20% down payment when buying a home.

Down payment norms vary by loan type. Conventional mortgages typically require 3–5% minimum, FHA loans allow as little as 3.5%, VA and USDA loans can require nothing down, and auto lenders often accept 10–20%. Note that the calculator treats the entered amount as the full purchase price — if you already have the financed amount in mind rather than the price, the percentage rows will still show the relative effect of each down payment level. For a single-scenario payment breakdown, try our Mortgage Payment Calculator or the general Loan Calculator.

The 20% Threshold and Private Mortgage Insurance

On conventional home loans, a down payment below 20% usually requires private mortgage insurance (PMI), an extra monthly premium that protects the lender, not you. PMI typically costs 0.3%–1.5% of the original loan amount per year and is not included in this calculator's results. If your down payment is under 20%, add an estimated PMI premium to the monthly figures shown to get a realistic total payment. Once you reach 20% equity, you can usually request to have PMI removed.

It is also worth remembering that the down payment is not your only upfront cost. Closing costs on a home purchase typically run 2%–5% of the price, covering appraisal, title, origination fees, and taxes. Make sure your cash reserve covers both the down payment and these additional expenses, plus an emergency fund. To explore the full cost picture of a home loan, see our Mortgage Calculator.

Assumptions and Limitations

Fixed rate and fixed payment: the calculator assumes a fully amortizing loan with a constant interest rate. Adjustable-rate mortgages (ARMs) will have payments that change over time.
No taxes, insurance, or PMI: monthly payment figures cover principal and interest only. Property taxes, homeowners insurance, HOA fees, and PMI will increase your actual monthly cost.
No fees: origination fees, closing costs, and discount points are excluded. If you roll fees into the loan, your principal — and payment — will be higher. Use the Mortgage Discount Points Calculator to evaluate paying points upfront.
Percentage-based scenarios: the calculator shows fixed down payment levels (0–20%). If your lender requires a specific dollar amount, divide it by the loan amount to find the equivalent percentage.
Zero-rate loans: if you enter a 0% interest rate, the calculator simply divides the principal evenly across all months.

Frequently Asked Questions

How do I calculate a down payment by hand?

Multiply the purchase price by the down payment percentage: $D = L \times \frac{d}{100}$. For example, 10% down on a $250,000 home is $250{,}000 \times 0.10 = 25{,}000$. Then subtract that from the price to get the amount you borrow: $250{,}000 - 25{,}000 = 225{,}000$. Your monthly payment is then based on the borrowed amount, not the full price.

What is a good down payment amount?

It depends on the purchase. For homes, 20% is the traditional benchmark because it avoids private mortgage insurance (PMI), but many buyers put down 3–10% and pay PMI until they build enough equity. For cars, 10–20% is common, and anything that keeps you from being "underwater" on the loan is reasonable. A bigger down payment lowers your payment and total interest, but don't drain your entire savings to get there — keep an emergency fund.

How much does a bigger down payment save me over the life of the loan?

The savings come from two sources: a smaller principal and the interest that principal would have accrued. On a $300,000 home at 5% for 30 years, going from 5% down to 20% down reduces the loan by $45,000 and can save well over $40,000 in total interest, plus roughly $240 per month. The exact figure depends on your rate and term — compare scenarios in the table above to see your numbers.

Do I have to put exactly 20% down on a house?

No. The 20% figure is a threshold, not a requirement — it's the point where conventional lenders stop requiring PMI. Many loan programs allow far less: conventional loans often accept 3–5% down, FHA loans allow 3.5%, and VA and USDA loans can require nothing. The trade-off for a smaller down payment is a higher monthly payment plus PMI until you reach 20% equity, so run both scenarios before deciding.

Is it better to make a bigger down payment or keep the cash invested?

There is no universal answer. A larger down payment gives a guaranteed "return" equal to your mortgage rate, while investing may earn more but with risk. Consider your mortgage rate, how long you'll stay in the home, job stability, and whether you have an emergency fund. Also remember buying costs don't stop at the down payment — closing costs typically add another 2–5% of the price. This is general information, not personalized financial advice.

How do I convert a dollar down payment into a percentage?

Divide the cash you have by the purchase price and multiply by 100: $d = \frac{D}{L} \times 100$. For example, $30,000 on a $280,000 home is $\frac{30{,}000}{280{,}000} \times 100 \approx 10.7\%$. If your lender quotes a required percentage, reverse the formula: multiply the price by the percentage divided by 100 to find the dollar amount you'll need at closing.

Why does the calculator show the same payment savings for each extra dollar down?

Each dollar you add to the down payment reduces the principal by exactly one dollar, so the payment drops by the same amount per dollar regardless of your starting point. That per-dollar change equals $\frac{r}{1-(1+r)^{-n}}$ — the amortization factor from your rate and term. However, total interest savings accelerate: the earlier in the loan and the higher the rate, the more each prepaid dollar saves you in interest.