Is it better to put 20% down or keep the cash?

It depends on your situation. Putting 20% down eliminates PMI and lowers your monthly payment, but it ties up a large amount of cash. If you can earn more than your PMI cost by investing that money, or if you need an emergency fund, a smaller down payment may make more sense. Many buyers choose 10% as a middle ground — low enough to preserve liquidity, high enough to reduce PMI costs significantly.

Does a larger down payment lower my interest rate?

Often yes, though not always directly. Lenders price risk through the loan-to-value (LTV) ratio — the lower your LTV (meaning the more you put down), the lower the perceived risk, and the better rate you may qualify for. More importantly, putting at least 20% down removes PMI, which reduces your effective monthly cost even if the rate itself does not change. Shopping multiple lenders matters far more than the down payment size when it comes to the rate you actually receive.

What counts as a down payment — can I use gift money?

Down payments can come from savings, investments, the sale of another property, or gift funds from family members. Most loan programs allow gift money, but require a gift letter stating the funds are a gift and not a loan. Conventional loans may require that a portion of the down payment (typically at least 3%–5%) come from your own funds if the down payment is below 20%. FHA loans allow 100% gift funds for the down payment. Always document the source of your funds — lenders will verify the paper trail.

Down Payment
Calculator.

Estimate exactly how much cash you need upfront —
by home price, loan type, down payment percentage, monthly payment, and PMI.

Your purchase details

Home price ?The purchase price of the home. Adjust to match what you're shopping for in your target market.

Down payment ?The percentage of the home price you'll pay upfront. The dollar amount below updates automatically.

Down payment amount

Loan details

Loan type ?Conventional loans need 3%+ down. FHA needs 3.5%+. VA and USDA allow 0% down for eligible buyers.

Loan term

Expected interest rate ?The annual mortgage rate you expect to qualify for. Even 0.25% makes a meaningful difference over 30 years.

Down payment needed

$40,000

⚠ PMI applies — put 20% down to remove it

Loan amount

$360,000

Monthly P&I

$2,353

Down 10% Loan 90%

Full breakdown

Home price (incl. ~3% buyer agent commission) $400,000

Down payment (10%) $40,000

Loan amount $360,000

Monthly principal & interest $2,353

PMI (est.) $210/mo

Total monthly (P&I + PMI) $2,563

Minimum down by loan type

Loan type	Min. down	Min. amount*	PMI/MIP
Conventional	3%	$12,000	Yes (<20%)
FHA	3.5%	$14,000	Yes (MIP)
VA	0%	$0	No
USDA	0%	$0	Annual fee

*Based on current home price entered above.

💰

Beycome buyer program**

Turn ~3% into up to 2% back, use it for your down payment or closing costs.

Beycome buyer rebate (2%) + $8,000

Effective down payment needed $32,000

Discover our buyer program

** Beycome Buyer Program: In a traditional transaction, the seller typically pays ~3% to the buyer's agent. With Beycome, we keep 1% and credit the rest (up to ~2%) back to you. Any amount above our 1% fee is returned to you. Credits vary by price, state laws, and market conditions. If no commission is offered by the seller, a minimum fee of $1,599 applies to the buyer.

How to read your results.

Five numbers decide whether you can afford to close. Here's what each one means.

Down payment needed.

The large orange number is the cash you must bring to the closing table — separate from closing costs, which run another 2%–5% of the purchase price. If you put 10% down on a $400,000 home, you need $40,000 in savings just for the down payment, plus roughly $8,000–$20,000 in closing costs. Budget for both.

The split bar shows your equity from day one.

The green bar shows what percentage of the home you own outright the moment you close. The blue portion is what the bank owns. A 10% down payment means you start with 10% equity. That matters because lenders remove PMI once you reach 20% equity — so the bigger your initial down payment, the faster you hit that milestone.

PMI badge tells you your insurance status.

A yellow badge means you'll pay Private Mortgage Insurance every month — a cost that protects the lender, not you. On a $360,000 loan at 0.7% PMI, that's roughly $210/month extra until you reach 80% LTV. A green badge means you've cleared the 20% threshold and PMI doesn't apply. VA loans never have PMI.

Minimum down by loan type.

The table at the bottom of the results highlights your active loan type and shows what every loan type requires. Conventional: 3% minimum. FHA: 3.5% (or 10% with low credit). VA and USDA: 0%. If you're eligible for a VA loan, switching loan types in the dropdown will immediately show you the 0% scenario — often eye-opening for first-time buyers who don't realize $0 down is an option.

The Beycome rebate can cover part of your down payment.

When you buy with Beycome, the traditional 2%–3% buyer agent commission gets returned to you as cash back. On a $400,000 home, that's up to $8,000 back in your pocket — which you can use toward your down payment, closing costs, or rate buydown points. The green box at the bottom of the results shows exactly how much you'd receive and what your effective out-of-pocket becomes.

How the calculator works

1

Down payment amount Home price × down % = cash needed $400,000 × 10% = $40,000
2

Loan amount Home price − down payment = loan $400,000 − $40,000 = $360,000
3

Monthly P&I M = P[r(1+r)ⁿ] / [(1+r)ⁿ−1] 6.8% on $360k / 30 yrs = ≈$2,353/mo
4

PMI Loan × 0.7% ÷ 12 (if down < 20%) $360,000 × 0.007 ÷ 12 = +$210/mo

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What is a down payment?

The upfront cash that determines your loan size, your monthly payment, and whether you pay PMI every month for years.

Your skin in the game.

A down payment is the portion of the home's purchase price you pay at closing from your own funds — not borrowed. It signals to the lender that you're financially committed to the property. The larger your down payment, the smaller your loan, the lower your monthly payment, and the less risk the lender takes on — which often translates to a better interest rate.

The 20% myth — and the reality.

The "20% rule" comes from the PMI threshold: put less than 20% down on a conventional loan and you'll pay private mortgage insurance until you reach 20% equity. But most buyers today put down far less. According to the National Association of Realtors, the median down payment for first-time buyers is around 8%, and repeat buyers average about 19%. Programs like FHA (3.5% minimum), HomeReady (3%), and VA/USDA (0%) make homeownership accessible without 20% in hand.

Down payment sources lenders accept.

Most lenders accept: personal savings and checking accounts, investment accounts (with seasoning), proceeds from the sale of another property, employer assistance programs, and gift funds from family members (with a gift letter). What lenders scrutinize closely are large recent deposits — they need to verify the funds weren't borrowed. Loans, personal credit lines, and cash advances don't count as down payment funds.

Down payment vs. closing costs — don't confuse them.

Many first-time buyers budget only for the down payment and get surprised at the closing table. Closing costs — including lender fees, title insurance, appraisal, escrow, and prepaid interest — typically add another 2%–5% of the purchase price on top of your down payment. On a $400,000 home with 10% down, you'd need $40,000 for the down payment plus an additional $8,000–$20,000 for closing. Always budget for both.

Buy your next home with Beycome and get up to 2% back at closing.**

We keep 1% of the seller-paid commission and
credit the rest back to you.*

Start savvy buying now

Down payment by loan type.

Every loan program has its own minimum — and its own trade-offs. Here's what each one requires on a $400,000 home.

Conventional loan

Minimum down3% ($12,000 on $400k)

Avoid PMI at20% ($80,000 on $400k)

PMI rate (est.)0.5%–1.5% annually

Credit score min.620 (ideally 740+)

Conventional loans are the most flexible — no upfront mortgage insurance premium, PMI drops off at 20% equity, and there's no loan limit for standard conforming loans (up to $766,550 in 2024 for most areas). The higher your credit score and down payment, the better your rate. At 20% down, PMI disappears entirely.

FHA loan

Minimum down (580+ credit)3.5% ($14,000 on $400k)

Minimum down (500–579 credit)10% ($40,000 on $400k)

Upfront MIP1.75% of loan amount

Annual MIP0.55% of loan balance

FHA loans are the go-to for buyers with lower credit scores or limited savings. The trade-off: you pay an upfront MIP (1.75% of the loan, rolled into the loan balance) and an ongoing annual MIP (0.55% for 30-year loans). If you put less than 10% down, MIP stays for the life of the loan. At 10%+ down, it cancels after 11 years.

VA loan

Minimum down0% ($0 on any price)

PMINone

VA funding fee1.25%–3.3% (varies)

Who qualifiesVeterans, active duty, surviving spouses

VA loans are the most powerful mortgage benefit available — 0% down, no PMI, and competitive rates. The only cost is a one-time VA funding fee (1.25%–3.3% of the loan depending on service history and whether you've used the benefit before). Some veterans with service-related disabilities are exempt. There's no loan limit for eligible borrowers with full entitlement.

USDA loan

Minimum down0% ($0 on eligible properties)

PMINo (annual guarantee fee instead)

Upfront guarantee fee1% of loan amount

Annual fee0.35% of loan balance

USDA loans require 0% down for homes in eligible rural and suburban areas — which covers more geography than most buyers expect. There are income limits (typically up to 115% of the area median income). The annual guarantee fee (0.35%) is lower than FHA's MIP (0.55%), making USDA a cheaper long-term option for qualifying buyers who don't need the full flexibility of conventional loans.

Is 20% really necessary?

No. But it has real advantages. Here's when it's worth it — and when it isn't.

Why 20% matters: PMI and equity.

The 20% threshold eliminates PMI on conventional loans, which can add $100–$300+ per month to your payment depending on the loan size. Over five years, that's $6,000–$18,000 in extra costs — money that builds no equity. On a $400,000 home, saving from 10% to 20% down takes you from $40,000 to $80,000 upfront, but removes ~$210/month in PMI. You break even on the extra savings in about 19 years — so if you're staying long-term, 20% wins mathematically.

Why less than 20% can be smart.

In a market where home prices are rising, buying sooner with 10% down and paying PMI can be better than waiting two more years to save the extra 10%. If the home appreciates $40,000 while you're saving, you've "paid" far more than the PMI would have cost. Time in market often beats PMI avoidance. Additionally, keeping extra cash liquid — for repairs, moving costs, or emergencies — reduces financial stress after closing.

The 10% sweet spot.

Many experienced buyers choose 10% as a pragmatic middle ground. It's enough to qualify for better conventional loan rates, keeps PMI manageable (you'll reach 20% equity faster than with 3%–5%), and leaves cash available for closing costs and reserves. At 10% on a $400,000 home, your PMI (~$210/mo) will drop off in roughly 7–9 years — far shorter than the lifetime of a 30-year mortgage. Use this calculator to model 3%, 10%, and 20% side by side to find your own inflection point.

How to eliminate PMI faster.

You can request PMI cancellation when your loan-to-value ratio reaches 80% (based on the original purchase price, not current market value). To get there faster: make extra principal payments, request a new appraisal if your home has appreciated significantly (for conventional loans), or refinance once you've built 20% equity. The Homeowners Protection Act requires lenders to automatically cancel PMI when the balance reaches 78% of the original value on schedule — but you can request it earlier at 80%.