What exactly is PMI and why does it exist?

Private mortgage insurance protects the lender (not you) if you default on a conventional loan with less than 20% equity — it's an added monthly cost that doesn't build equity, which is why lenders waive it once you've reached that equity cushion.

Does a bigger down payment always make sense?

Not necessarily — it reduces borrowing cost and can eliminate PMI, but ties up more cash upfront. Whether that trade-off makes sense depends on your other financial priorities, like an emergency fund or higher-return investments.

Can I enter a down payment percentage over 100%?

The field is capped at 100% — a down payment can't exceed the home's price in this calculator's model, since that would imply a negative loan amount.

Does this calculator account for FHA's own mortgage insurance premium (MIP)?

No — it models the conventional-loan 20% PMI-avoidance convention specifically. FHA's MIP has different rules (often required for the life of the loan on smaller down payments) and isn't calculated here.

What if my down payment is exactly 20%?

The result shows PMI as cleared — the threshold in this calculator is inclusive, so exactly 20% down avoids the conventional PMI requirement, matching how most lenders apply the 20% convention.

How is 'amount more needed to clear PMI' calculated?

It's the difference between 20% of the home price and your entered down payment amount, floored at $0 once you're already at or above 20% — it tells you exactly how much more you'd need to put down to reach that threshold.

Does a higher down payment percentage change my interest rate?

Not directly in this calculator, but in practice many lenders do offer somewhat better rates or pricing at higher down payment tiers as part of their risk-based pricing — check with your specific lender for how their own pricing responds to your down payment level.

Is the down payment the only cash I need at closing?

No — you'll typically also need to cover closing costs (lender fees, title, escrow, and more), which are separate from the down payment. The Closing Costs Calculator estimates that portion.

Down Payment Calculator

About the Down Payment Calculator

Calculates the dollar amount of a down payment from a home price and percentage, the resulting loan amount, and whether it clears the 20% threshold most conventional lenders use to waive private mortgage insurance (PMI).

100% Free Runs in Your Browser No Sign-Up Required

How to use it

Enter the Home price.
Enter your planned Down payment as a percentage of the price.
Read the down payment amount, loan amount, and PMI status in the result panel.

Formula

Down payment amount = home price × down payment %
Loan amount = home price − down payment amount

PMI (private mortgage insurance) is typically required by conventional lenders when the down payment is below 20% of the home's value, since a smaller down payment means less equity cushioning the lender's risk if the borrower defaults.

Worked example

A $400,000 home with a 10% down payment: $40,000 down, a $360,000 loan, and $40,000 more down payment needed to clear the 20% ($80,000) PMI-avoidance threshold.

Typical minimum down payment by loan type

Typical minimum down payment by loan type
Loan type	Typical minimum down payment	Note
Conventional	3–5%	PMI typically required below 20% down
FHA	3.5%	Requires its own mortgage insurance premium (MIP), separate from conventional PMI
VA (eligible veterans/service members)	0%	No mortgage insurance requirement
USDA (eligible rural properties)	0%	Income and location eligibility apply

Interpreting your result

20% is the conventional-loan convention for avoiding PMI, not a universal rule — government-backed programs work differently: FHA loans allow down payments as low as 3.5% (with their own separate mortgage insurance premium that doesn't go away at 20% equity the way conventional PMI can), and VA loans for eligible veterans can allow 0% down with no mortgage insurance at all. This calculator models the conventional-loan 20% convention specifically.

Recommendations

• PMI on a conventional loan usually cancels automatically once your loan balance reaches 78% of the home's original value, and you can typically request cancellation at 80% — it isn't a permanent cost the way FHA's mortgage insurance premium can be.
• A larger down payment reduces your loan amount and therefore your monthly payment and total interest — run the Mortgage Calculator with the resulting loan amount to see the full payment picture.
• Down payment isn't the only upfront cost — budget for closing costs separately, which typically run a few percent of the home price on top of the down payment itself.

Frequently asked questions

No — it's a conventional-loan convention for avoiding PMI, not a legal minimum. FHA loans allow as low as 3.5% down, and VA loans for eligible borrowers can allow 0% down.

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