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Now it’s time to take action! To determine how much money you have for a down payment, take the following steps:

Step-by-Step Guide:


Ask yourself: What are my available funds? Some sources for these funds might be:
  • Savings
  • Equity in present home and/or other property
  • Investments (present value)
  • Retirement funds
  • Other (e.g., monetary gifts from friends or family)
Ask yourself: How do I need to reserve for retirement, emergencies, education, etc? Subtract this amount from the available funds you calculated in #1.
 Calculate upcoming expenses.

When you buy a home, you typically pay closing costs, which can sometimes be quite substantial, e.g. 3% of the total sales price of the home. In addition, moving, doing repairs to your new home, buying new furniture, etc., can add up. Subtract these expenses from the amount you calculated in #2, and now you have determined how much you have for a down payment.

Here is a worksheet to help you with your calculations (Print this page using the Print button at the top of this page, then fill in the worksheet with pen or pencil.):

Money for DOWN PAYMENT
A. Available funds (assets)
Savings $
Equity in home or other property $
Retirement Funds $
Investments (present value) $
Other (such as personal gifts) $
Subtotal A $
Subtract money you would like to reserve for emergencies, retirement, a safety net, etc. $
Total A $
B. Anticipated Expenses
Closing costs (lawyer fees, PMI, loan origination fees, title search fee, appraisal fee, etc.) If you are unsure, factor in 3% of the total cost of the home, and then revisit once you have a more concrete number. $
Moving expenses (truck rental, movers, mover’s insurance, etc.) $
Repairs (to existing and/or new home) $
New furnishings $
Other expenses $
Total B $
A - B. Amount of money for Down Payment 
Total A $
Total B $
A - B $

 Consider your options.
  • If you do not have any money for a down payment, consider saving instead of paying off debt (assuming you have a debt-to-income ratio less than about 40%) in order to accumulate enough for a reasonable down payment.
  • If you do not feel that you can save enough for a down payment, or have only enough for a minimal down payment, look into loan plans that allow for 97% or 100% financing. If you go this route, be aware of the negatives associated with 100% financing, such as higher monthly costs, PMI, higher interest rates, greater likelihood that you will be asked to cover more of the closing costs, etc. Do a cost benefit analysis to help you determine what you would gain from waiting to buy versus what you would lose by waiting to buy.
  • If you are considering 100% financing, pursue the possibility of an 80/20 loan to help you avoid PMI.
Use the Mortgage Down Payment Comparison Calculator to help you compare the benefits of different down payment options.

For example, if you have a high savings rate, you may want to make a lower down payment and keep the rest of your money in the bank collecting interest. For most home buyers it makes sense to make a higher down payment because it will result in lower monthly payments and less interest paid on the loan.

Key takeaways:

  • Remember, the more money you put down, the lower your monthly payments, and the less money you pay on interest over the course of the loan.
  • Consider putting money away for a down payment instead of paying off debt if you have a debt-to-income ratio less than about 40%.
  • Don’t forget about closing costs and other expenses (e.g., emergencies, retirement) when calculating your down payment. It is often unwise to use all of your available money for a down payment and closing costs – keep a cash reserve.

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