How Your Down Payment Shapes Every Part of Your Mortgage
Your down payment is the most powerful single lever you control in the home buying equation. It affects your loan size, your monthly payment, whether you pay PMI, your interest rate in some cases, and your long-term equity position.
The PMI Tipping Point: 20% and Why It Matters
Private mortgage insurance (PMI) adds 0.5–1.5% of your loan balance annually to your monthly payment. On a $350,000 loan, that's $146–$438 per month in PMI alone. Once you reach 20% equity through payments or appreciation, you can request PMI removal on a conventional loan. Our home buying budget calculator models this trade-off with actual numbers.
Down Payment Assistance Programs: Free Money Most Buyers Miss
Over 2,000 down payment assistance programs exist across the US. According to the Urban Institute, less than 30% of eligible buyers use them. Programs range from grants (no repayment required) to forgivable second loans. The average grant is $10,000–$20,000. See our first-time buyer calculator to model a purchase including an assistance grant.
How Down Payment Affects Your Qualified Home Price
Every additional $10,000 in down payment increases your maximum home price by roughly $10,000–$12,000. A buyer at exactly the DTI limit who comes up with an additional $20,000 may unlock $30,000–$40,000 in additional home price. Check your exact numbers using our mortgage affordability calculator.