Down Payment Calculator
Twenty per cent is not a requirement — it is the threshold above which mortgage insurance disappears. This page prices that threshold so the decision is a comparison rather than a rule.
The Purchase
PMI estimates use 0.6% of the loan a year, a typical mid-range figure.
If you reach 20% instead
What 20 per cent actually buys
It removes private mortgage insurance, which on a conventional loan typically runs 0.3 to 1.5 per cent of the loan a year and protects the lender rather than you. On a $360,000 loan at 0.6 per cent that is $180 a month — real money, and money that buys you nothing. It is the only concrete thing the 20 per cent threshold delivers.
Waiting is not automatically better
Saving another 10 per cent of the purchase price takes time, and during that time you are paying rent, prices may move, and rates may change. The comparison is between PMI paid for a few years and the cost of waiting. This page gives the first figure precisely; the second depends on your rent and your market, which no calculator knows.
PMI is not permanent
Under US federal rules, you can request cancellation once the loan balance reaches 80 per cent of the original value, and it terminates automatically at 78 per cent. Appreciation can get you there faster than amortisation alone. Note that FHA mortgage insurance follows different rules and can last the life of the loan, which is a meaningful difference between loan types.
Frequently Asked Questions
Do I need 20% down to buy a house?
How much is PMI?
When does PMI end?
Is it better to wait and save 20%?
Sources
Official publications only. Links open the original document in a new tab.
- Consumer Financial Protection Bureau Owning a home — buying a house Down payments and mortgage insurance
- Consumer Financial Protection Bureau What is the difference between a mortgage interest rate and an APR? How the loan size affects the rate quoted