Down Payment Size Advisor
Recommends an optimal down payment amount by balancing PMI elimination, interest savings, and cash-on-hand safety.
Balance PMI, interest savings, and emergency cash—without overthinking it
The Down Payment Size Advisor recommends a down payment amount that trades off lower monthly costs (less PMI and a smaller loan) against the risk of draining your cash for emergencies and reserves. It’s designed for homebuyers comparing options like 5% vs 10% vs 20% down and who want a clear, numbers-based “best-fit” choice.
How the recommendation is chosen (first-year cost + reserve safety)
For each down-payment tier (default: 5%, 10%, 15%, 20%, 25%), the tool calculates loan size from the home price, then estimates first-year interest using a standard amortization approach. It adds estimated first-year PMI (if the loan-to-value implies PMI won’t be avoided) plus a simplified closing-cost effect. It then penalizes options that leave you with too little liquid cash after down payment and closing costs, using a reserve “months” safety proxy.
Why the “right” down payment can shift as your assumptions change
Results are sensitive to the interest rate and PMI rate you enter, because both directly change first-year cost. Closing costs are modeled as a fixed percentage of the home price and don’t vary with your down payment, so lender- or loan-type-specific closing patterns won’t be captured. The reserve-safety model uses a simplified taxes/insurance proxy (since those aren’t provided), so if your real escrow burden is much higher, you may want to keep more cash than the recommendation suggests.
Interpreting unusual inputs (or when recommendations become “tier limited”)
If your available cash-on-hand can’t cover the selected down payment and closing costs, that tier is treated as invalid and won’t be recommended. If your down payment reaches the PMI-avoid threshold (default 80% LTV / 20% down), the tool estimates PMI as $0 for that tier, which can make “just-over” thresholds look disproportionately better. If you set PMI rate to 0, the tool will treat PMI as $0 regardless of LTV, effectively shifting the decision to interest savings vs cash safety.
Common caveats to keep the recommendation realistic
This tool focuses on first-year impact plus liquidity safety—it doesn’t fully optimize lifetime cost, refinance possibilities, or programs like lender credits, rate buydowns, or special PMI structures. PMI cancellation rules vary by lender and loan rules, so PMI might end earlier than estimated (or not as early), affecting the true savings of higher down payments. Use the calculator as a planning guide, and verify PMI/closing details with your lender or loan officer.
Related calculators
House Purchase Affordability Stress Test
Stress-tests your home budget under rate shocks, income dips, and cost surprises to find the safe maximum purchase price you can truly afford.
Down Payment Reality Check
See exactly how your down payment affects monthly payments, total interest, and lifetime mortgage cost — so you know if a bigger upfront payment is truly worth it.
Rent vs Buy Break-Even Calculator
Estimates how many years until buying a home becomes cheaper than renting, accounting for opportunity cost, taxes, maintenance, and selling costs.
Loan Term Break-Even Tool
Compare monthly payments and total interest across loan terms to find where extending your loan stops being worth it.
Mortgage Refinance Break-Even Calculator
Calculate exactly when refinancing pays off and whether it's worth it before your planned move-out or payoff date.