The down payment is the single biggest barrier between renters and homeowners. Save too little and you'll pay years of PMI plus a stretched mortgage. Save too much and rising home prices leave you further from ownership than when you started. Understanding the tradeoff between down-payment size and time-to-buy is what separates strategic homebuyers from perpetual savers.

The '20% down' rule is largely mythology. In 2024, the median first-time buyer put down just 8%. Conventional loans allow 3% down. FHA requires only 3.5%. VA and USDA loans require 0%. Waiting years to accumulate 20% while home prices appreciate 4–6% annually often costs more than paying PMI for a few years. This calculator models both scenarios so you can see the actual trade in dollars, not slogans.

PMI (Private Mortgage Insurance) is the tax on low down payments — costing 0.3–1.5% of loan balance annually. On a $400,000 mortgage that's $1,200–$6,000 per year. PMI automatically cancels at 78% loan-to-value ratio, and you can request cancellation at 80% LTV with a fresh appraisal. In fast-appreciating markets, PMI often disappears within 2–3 years as home value rises. FHA loans, however, carry MIP (their equivalent) for the life of the loan unless refinanced to conventional.

Cost-of-waiting is the calculator's most important output. Say you need $80,000 for 20% down on a $400,000 home. Saving $2,000/month at 5% HYSA reaches goal in 3.1 years. But if home prices rise 5% annually, that $400k home becomes $464k in 3 years — meaning your target down payment is now $92,800, not $80,000. The gap widens the longer you wait. Buying at 10% down today may capture appreciation better than waiting for 20%.

Where you park down-payment savings matters enormously. For a purchase within 2 years, use a high-yield savings account (4–5% APY, FDIC insured) or short-term Treasury bills. For 2–5 year horizons, add I-Bonds or short-duration CDs. Never put down-payment money in stocks — a 20% market drop 6 months before closing has ended countless homeownership dreams. The market will recover; your closing date won't wait.

Closing costs are the forgotten expense. Beyond down payment, expect 2–5% of home price in loan origination, title insurance, appraisal, inspection, escrow, and prepaid taxes and insurance. On a $400,000 home, that's $8,000–$20,000 additional cash needed at closing. Some sellers negotiate to cover portions of closing costs — always ask, especially in buyer's markets. Down payment assistance (DPA) programs exist in every state for first-time buyers under income limits.

Use this calculator to model your specific scenario — different down payment percentages, savings rates, appreciation assumptions. Combine with our House Affordability Calculator to verify the target home price fits your income and DTI. Export the projection as PDF to share with your partner, and adjust monthly as you make progress.