A 20% down payment is the gold standard in real estate. By reaching this threshold, you completely eliminate Private Mortgage Insurance (PMI) and lower your overall loan costs. See your exact monthly payment breakdown with 20% down.
Total Monthly Payment
$3,149
Over 30 years, you'll pay $538,772 in interest - more than 1.3x your loan amount.
Principal & Interest
$2,608
Taxes
$417
Insurance
$125
In year 1, 87% of your payment goes to interest and only 13% reduces your balance.
At this rate, it takes until year 21 before more than half your payment builds equity.
On your $400,000 loan, you'll pay $538,772 in interest - 1.3x what you originally borrowed.
Switching to a 15-year term would cut your interest in half - but raise your monthly payment.
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If the payment feels high - a lower home price or larger down payment will move the needle more than a slightly better rate.
If you're close to 20% down - getting there eliminates PMI and meaningfully reduces your monthly cost.
If you're comparing loan terms - a 15-year mortgage costs more monthly but saves significantly on total interest.
Putting 20% down is heavily recommended because it allows you to avoid Private Mortgage Insurance (PMI). It also significantly lowers your total loan amount, meaning you will pay less interest over the life of the loan and have lower monthly payments.
A 20% down payment lowers your monthly payment in two ways: first, by reducing the principal amount you are borrowing, and second, by eliminating PMI, which usually costs 0.5% to 1.5% of the loan amount annually.
If you have ample savings, putting 20% down is generally beneficial as it removes PMI and provides immediate equity. However, if reaching 20% depletes your emergency fund, it may be safer to put less down, pay PMI temporarily, and keep a cash cushion for unexpected home repairs.
Estimates based on your inputs. Actual results may vary. Terms →