How down payments affect mortgages

Down payment and loan amount

In a purchase estimate, the starting loan is the price minus the down payment. You can enter the down payment in dollars or as a percent of the price. If you type a loan amount directly, that override replaces the calculated loan until you clear it.

A larger down payment usually means a smaller loan, a smaller principal-and-interest payment, and less interest over the life of the schedule. It also increases the cash you need at closing, before credits and earnest money.

Cash to close is more than the down payment

The calculator’s cash-to-close line adds the down payment to closing costs and prepaids you enter, then subtracts lender credits, seller credits, and earnest money already deposited. Credits reduce cash due. They do not reduce principal.

An upfront program fee is part of the loan when “finance upfront” applies, so it is not also added to the cash due. Leaving a fee at zero does not mean a real closing will have no costs. It means you have not entered any.

Down payment and mortgage insurance

On the conventional setting, the default scenario uses a 20% down payment and the calculator reports that PMI is not required. A smaller down payment can make the model include the PMI rate you entered.

A 20% down payment in this estimate is not a rule that every lender will follow, and it is not a promise that mortgage insurance will be waived. The loan type, the occupancy you select, and the lender’s own rules can differ.

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Related guides

• How mortgage payments are calculated
• What affects monthly mortgage costs?
• Understanding PMI

Read the methodology

Written to explain how this site’s calculators work. Not a review by a licensed mortgage professional, and not a recommendation to borrow. These notes are not financial, tax, or legal advice.