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Saving for your down payment

When buying a home, the amount of cash you put down towards the purchase price plays an important role in the kind of mortgage you qualify for.

The larger the down payment, the less you are required to borrow.

How much of a down payment do you need?

The larger the down payment, the less you are required to borrow.

The standard down payment amount is 20% of the home's purchase price. For example, if you buy a house for $100,000 a 20% down payment would require you to put down $20,000 and obtain a loan for $80,000. Your down payment does not include closing costs.

What if you don't have 20%?

If you can't put 20% down, your lender will typically require you to pay a mortgage insurance company to insure the lender against nonpayment or default on a mortgage. Mortgage insurance payments are included in your monthly payment.

Buyers with less than a 20% down payment, but at least 3.5% saved, could qualify for an FHA loan. This is a government-backed program that offers fewer restrictions on your down payment and qualifying credit score than conventional mortgages.

Setting up a savings account

Whether you plan on buying a home in the next couple of years or further down the road, it's never too late to start saving for your down payment. There are several steps you can take to add more money towards your down payment each month:

  • Create a separate savings account for your down payment. You'll be less tempted to spend it if it's away from the rest of your funds.
  • Set up a predetermined amount to be automatically transferred into your savings account each month.
  • Cut back on luxuries such as expensive meals and transfer these savings to your account.

If you have any questions or would like us to walk you through the various options, call 1-800-248-4638 to talk to one of our experienced mortgage representatives.

Calculate how much you can borrow

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Please enter a monthly payment amount between $30 and $150,000.

This is the amount you can afford to pay towards your principal and interest each month. It does not include taxes and insurance, and assumes no mortgage insurance is required for the loan. Learn more about what's in a monthly payment.

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