What your down payment result shows
The headline is the cash the purchase actually requires, and it is larger than the deposit. Closing costs run to a few percent of the price and are due in cash at completion, on top of the deposit — this is the single most common reason a buyer who has "saved the deposit" discovers they have not.
Below that, the saving timeline turns the gap into a date rather than an abstraction, and the last two lines price the decision most first-time buyers are actually facing: buy now with less than 20% down, or wait. Waiting produces a lower payment and avoids mortgage insurance. It also means paying whatever price and rate apply months later, and paying rent throughout. The calculator shows the payment difference; the section below sets out the part that cannot be calculated.
How to use this calculator
- Target price — a realistic figure for what you are looking at, not an aspiration.
- Down payment percentage. Try 20%, then try 5%, and compare the payment lines.
- Closing costs at 2–5%. Ask a local lender for a typical figure in your area; it varies with state taxes and title practices.
- Saved and saving. Only count money genuinely earmarked for this — not the emergency fund, which has to survive the purchase.
- APY on where the money is held. A deposit fund belongs in cash, and the difference between a big-bank account and a competitive one is worth real months off the timeline.
Is 20% actually necessary?
No. It is a threshold, not a requirement: at 20% down a conventional lender stops charging mortgage insurance and usually offers a slightly better rate. Many conventional loans allow 3% to 5%, FHA loans 3.5%, and VA and USDA programmes nothing at all for those who qualify.
What 20% buys is a smaller loan, no insurance premium and a lower payment. What it costs is time — and time has a price that no calculator can quote, because it depends on what happens to prices and rates while you save. If prices rise faster than you accumulate, the deposit target moves away from you. If they fall, waiting was free.
Three things make waiting clearly worth it: you are close, prices are flat or falling, and the extra months of rent are cheap relative to the payment saving. Three things argue for buying sooner: mortgage insurance that falls away within a few years anyway, a rate you can refinance later, and rent that is close to what the payment would be.
One thing to avoid entirely: draining the emergency fund to reach 20%. A house generates unplanned expenses immediately, and closing with no reserves is how a good purchase becomes a credit card balance.
What the cash is actually for
- The down payment — equity from day one.
- Closing costs — lender fees, title insurance, appraisal, recording, attorney where applicable, plus prepaid interest and the first year of homeowner insurance.
- Escrow set-up — several months of property tax collected up front to seed the account. Not a fee, but cash you need on the day.
- Moving and immediate repairs — never in a lender’s figure and never zero.
- Reserves — some loan programmes require you to still hold a few months of payments after closing, and it is a good idea regardless.
Two sources of help worth checking before assuming you are short. Down payment assistance programmes exist in most states, often as grants or forgivable second loans for first-time or moderate-income buyers, and eligibility is wider than most people expect. And seller concessions — where the seller contributes to your closing costs — are negotiable, particularly in a slower market.
Gift funds from family are also permitted by most programmes, with documentation: lenders require a gift letter confirming the money is not a loan, and there are rules about how long it must have been in your account.
Where to keep a deposit fund
In cash, and in a high-yield savings account or a short CD rather than the market. The reasoning is the date: a deposit has a deadline, and a portfolio that falls 20% the quarter before you buy cannot be waited out. That is the difference between money with a fixed horizon and money without one.
Within cash, the account matters more than most people think. On a $60,000 target the gap between a big-bank rate and a competitive one is worth hundreds of dollars a year and can pull a month or two off the timeline — see the savings calculator for the same maths applied to any goal, and the CD calculator if your date is fixed and more than a few months out.
How much house the deposit implies
It is worth running this backwards as well as forwards. A deposit you can realistically reach in a year or two implies a price range, and that range is often more informative than the price you started with — particularly if the cash requirement at your target is years away.
Two adjustments usually close a gap faster than saving harder. Lowering the target price cuts the deposit, the closing costs and the payment together, all three proportionally. And accepting a lower deposit percentage moves the date forward immediately at the cost of mortgage insurance you can calculate and that eventually stops — the mortgage calculator dates that drop-off precisely.
What does not usually work is stretching the term to make a bigger price fit. A longer loan lowers the payment without changing the cash you need on the day, so it does nothing for the problem this page is about while adding substantially to what the house costs over its life.
If the price range that emerges is uncomfortable, that is useful information arriving at the right time. The affordability calculator approaches the same question from income rather than cash, and the two together bracket a realistic budget better than either alone.
What this calculator assumes
- Prices and rates hold still while you save. They will not, and that is the central uncertainty in the wait-or-buy decision rather than a rounding error.
- A constant monthly contribution and a constant APY.
- Closing costs as a flat percentage. Actual costs vary with state, lender and title practice — a Loan Estimate is the authority.
- A 30-year loan in the payment comparison, principal and interest plus mortgage insurance only. Property tax and insurance are excluded there because they are the same either way.
- No assistance programmes, gifts or seller concessions, any of which would reduce the cash needed.
These are planning estimates. Talk to a lender early — not to borrow, but to find out what you would actually qualify for and what closing costs look like where you are buying.
One habit makes all of this easier: get a written Loan Estimate from two or three lenders before you are seriously shopping. It costs nothing, it does not commit you, and it converts every percentage on this page into the actual dollar figures for your area and your credit profile. Buyers who do it are consistently less surprised at closing than buyers working from national averages — including the ones on this page.
Down payment questions people ask
How much do I need for a first home?
Less than most people assume for the deposit and more than most assume in total. Conventional loans go down to 3% and FHA to 3.5%, but closing costs add another 2–5% of the price in cash, and you should still have an emergency fund afterwards. The total cash figure above is the honest number.
Can I use my 401(k) or IRA for a down payment?
You can, and it is usually a poor idea. A 401(k) loan must be repaid quickly if you leave the job, and an early IRA withdrawal costs tax and often a penalty — though first-time buyers may withdraw up to a lifetime limit from an IRA penalty-free. Either way you are removing decades of tax-sheltered growth to accelerate a purchase by a year or two.
Do I lose money by putting less than 20% down?
You pay mortgage insurance until you reach 20% equity, which is a real cost with an end date you can calculate. Whether that is worse than waiting depends on rent, on what prices do while you save, and on how soon the insurance would drop off.
Are closing costs negotiable?
Some of them. Lender fees are sometimes reducible, especially with competing offers, and a seller may agree to contribute in a slower market. Third-party costs such as title insurance, appraisal and recording fees are largely fixed by the provider or the state.