Calculate your down-payment target, how much more you need to save, and how many months it will take at your current pace. Factors in interest from a high-yield savings account.
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Down payment target
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Still need
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Months to goal
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Goal date
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How much down payment do you actually need?
Loan type
Minimum down
Notes
VA loan
0%
Qualifying veterans, active duty, surviving spouses
USDA loan
0%
Qualifying rural and some suburban properties
Conventional 97
3%
First-time buyer programs
FHA loan
3.5%
580+ credit score; 10% if score 500–579
Conventional
5%
Most common entry-level
Conventional (PMI-free)
20%
Avoids private mortgage insurance
Jumbo loan
10–20%
Loan above $806,500 (most counties, 2026)
The PMI question: 20% down or pay PMI?
PMI (private mortgage insurance) is required on conventional loans
with less than 20% down. Typical cost: 0.3–1.5% of the loan amount
per year — about $80–$400/month on a $320,000 loan. Two ways to
think about it:
Wait and save 20%: Avoids PMI, but you spend
another 1–3 years renting while your savings catch up. In a rising
home-price market, prices may rise faster than your savings.
Buy now with 5–10% down + PMI: Start building
equity immediately. PMI is removable at 80% LTV (typically 5–7
years of payments + appreciation). Many buyers come out ahead this
way in appreciating markets — but pay more in mortgage interest
long-term.
Where to keep your down payment money
The rule of thumb: match your timeline to the risk.
1–2 years away: HYSA (4–4.5% APY in 2026), short-term CDs, US T-bills. No equity exposure.
2–4 years away: Mostly HYSA, maybe 20% in short-duration bond funds.
4–7 years away: 60/40 conservative mix is reasonable. Accept some volatility.
7+ years: Most financial planners say go heavy stocks — but understand that timing the market for a specific purchase is risky. The 2008–2009 market drawdown delayed many home purchases by 5+ years.
It depends on the loan type. Conventional 97: 3% minimum. FHA: 3.5% minimum (580+ credit score). VA: 0% for qualifying veterans. USDA: 0% for qualifying rural properties. Jumbo: typically 10–20%. To avoid PMI on a conventional loan, you need 20% down.
Why aim for 20% down?
A 20% down payment unlocks three benefits: (1) no PMI — saves 0.3–1.5% of loan per year. (2) Better interest rates from most lenders. (3) Lower monthly payment from a smaller loan. On a $400k home, 20% down vs 5% down can mean ~$700/month in lower housing cost.
Should I save in cash or invest the down-payment fund?
It depends on your timeline. Under 2 years — high-yield savings account (HYSA) or short-term CDs only. 2–5 years — mostly HYSA with maybe 20–30% in conservative bond funds. 5+ years — diversified investing makes sense, but understand the risk: a 2008-style 30% drawdown right before you're ready to buy is real.
What's a HYSA and where do I get one?
A high-yield savings account is an FDIC-insured savings account that pays much higher interest than traditional bank savings. As of 2026, HYSAs are paying 4–4.5% APY at banks like Marcus, Ally, Discover, Wealthfront, Capital One 360, SoFi, and Synchrony. Compare to 0.01% at major brick-and-mortar banks — a meaningful difference.
Can I use 401(k) money for a down payment?
Two options, both with caveats: (1) 401(k) loan — borrow up to $50k or 50% of vested balance, repay with interest within 5 years. Risky if you leave your job (often becomes immediately due). (2) First-time homebuyer IRA withdrawal — Roth IRA contributions can be withdrawn anytime tax-free; traditional IRA allows $10,000 penalty-free for first-time buyers but is still federally taxable.
What about gift money from family?
Mortgage lenders allow gift funds from family for the down payment, but you'll need a gift letter documenting that it's a gift, not a loan. Conventional loans typically require all gift funds to be properly sourced. FHA loans have more lenient gift rules. Lenders may also require gift funds to be in your account 60+ days before close to "season" them.
Does the calculator account for interest on my savings?
Yes — enter your expected annual return (typically 4–4.5% for an HYSA in 2026) and the calculator factors in compounding interest. Without interest, saving $1,000/month for $80,000 takes 80 months; with 4% return, ~73 months — about 7 months earlier.