Mortgage Down Payment Calculator

What this calculator is, and when to reach for it

The deposit is the one number in a property purchase you have genuine control over, and it does far more work than most buyers realise. It is not simply the part of the price you pay in cash. It sets the loan, and through the loan it sets the payment, the total interest, the rate a lender offers you, and whether you are required to pay mortgage insurance every month for years.

That is four consequences from one decision, which is why "save a bit more" is such durable advice and why the last few thousand can be worth more than the first fifty. The relationship is not smooth: lenders price in bands, so crossing a threshold changes your terms in a step rather than a slope.

This calculator works out the loan you would need, what proportion of the price your deposit represents, and the cash you need up front once buying costs are included. That last figure is the one that catches people out, because the deposit and the fees come from the same savings and only one of them is usually planned for.

Use it when you are deciding whether to buy now or save longer, when you are choosing how much of your savings to commit, or when you want to see what a specific extra amount would actually buy you.

Why the thresholds matter more than the amount

Lenders group borrowers into bands by loan-to-value: the loan as a percentage of the property value. A deposit of one fifth of the price puts you at 80% loan-to-value, which in most markets is where mortgage insurance falls away and the better rates begin. Ten percent and five percent are common bands below that, each with worse pricing than the one above.

Because the bands are steps, moving from just below a threshold to just above it can change your monthly cost by more than a much larger increase elsewhere in the range. It is worth knowing precisely which side of a boundary you are on before deciding that another few months of saving is not worth it.

The reverse is also true. If you are comfortably inside a band, additional deposit produces only the ordinary benefit of a smaller loan, and that money may do more for you as accessible savings.

Where to go next

The loan to value calculator is the natural companion, showing exactly where a given deposit places you against the bands. To see what the resulting loan costs each month, use the mortgage calculator, and to see what it costs across its whole life, the amortization calculator.

If you are still working out what you can spend, the affordability calculator and the home affordability calculator approach it from income and from price respectively. The qualification calculator frames the same ground as a lender would.

Once you own the property, the home equity calculator tracks what your deposit has grown into, and the buying a home journey puts the whole sequence in order.

How the figures are worked out

Three straightforward calculations, and one that people consistently get wrong because it involves money that is easy to forget.

loan = price − deposit   |   deposit % = (deposit ÷ price) × 100   |   cash needed = deposit + closing costs

price

the agreed purchase price of the property

deposit

the cash you contribute up front

closing costs

fees to complete the purchase, which are not added to the loan here

Closing costs are not borrowed here

This calculator treats buying costs as cash you must produce, not as something folded into the loan. That is the conservative and usually correct assumption: legal work, valuations, searches, arrangement fees, and purchase taxes are generally paid at completion from your own funds.

The consequence is that the cash you need is always larger than your deposit. A buyer who has saved exactly the deposit has not saved enough, and discovering that after an offer is accepted is one of the more stressful ways a purchase can unravel.

How the deposit reaches the monthly payment

Every unit of deposit is a unit not borrowed, and a unit not borrowed never accrues interest. The effect on the payment is direct and proportional: a loan 10% smaller produces a payment 10% smaller at the same rate and term.

The effect on total interest is larger than proportional in perception, because interest compounds across decades. Reducing the loan also reduces every future interest charge calculated against it, which is why a deposit made today is worth considerably more than its face value across thirty years.

Mortgage insurance is the hidden lever

Where a deposit falls below a lender’s threshold, insurance is usually required, and it protects the lender rather than you. It is charged monthly, adds nothing to your equity, and in many markets can be removed later once you hold enough equity, though the process is rarely automatic.

Because it is a pure cost, avoiding it is often the single largest financial argument for a bigger deposit, and it can outweigh the interest saved on the smaller loan. If you are close to the threshold, work out the insurance cost explicitly before deciding.

When a smaller deposit is the right answer

Bigger is not automatically better. Emptying your savings to reach a threshold can leave you unable to furnish, repair, or absorb a lost month of income, and lenders in some markets look for reserves after completion.

There is also the question of timing. Waiting two years to save more means two more years of rent and exposure to whatever prices and rates do in the meantime. The calculator can tell you what each deposit level costs; whether the wait is worth it is a judgement about your own circumstances.

What this page assumes

This calculator derives loan principal as property price less down payment, calculates the down-payment percentage, and includes entered closing costs only in the initial cash estimate.

It does not estimate affordability, lender eligibility, insurance qualification, or government programs.

Worked examples, step by step

Take a 400,000 property at 6.5% over thirty years, and compare three common deposit levels.

What each deposit level produces

Between 5% and 20%, the payment falls by 379.24 a month. Across thirty years that is roughly 136,500 of payments avoided, for an additional 60,000 of deposit — and that comparison ignores mortgage insurance entirely.

Add insurance and the case strengthens considerably. At 95% loan-to-value a buyer would typically be paying an insurance premium every month that buys them nothing, while the 20% buyer pays none. In many markets that premium alone is worth more than the interest difference.

The cash you actually need

Now add buying costs. If legal fees, searches, valuation, and purchase tax come to 15,000, the buyer aiming at 20% needs 95,000 available at completion, not 80,000. The 10% buyer needs 55,000 rather than 40,000.

This is the number to save toward. Framing the goal as "80,000 deposit" rather than "95,000 in the account" is how buyers end up scrambling in the final fortnight, and it is entirely avoidable by deciding the costs first and treating only the remainder as deposit.

The vocabulary, on and around this page

Down payment

The cash you contribute toward the purchase price up front, also called a deposit. It determines the loan you need.

Loan principal

The amount borrowed, being the purchase price less your deposit. Every unit of it accrues interest.

Loan to value

The loan as a percentage of the property value. Lenders price in bands around it, so thresholds matter more than small changes.

Mortgage insurance

A premium usually required when the deposit falls below a lender threshold. It protects the lender, adds nothing to your equity, and can often be removed later.

Closing costs

One-off fees to complete a purchase, such as legal work, valuation, searches, and arrangement fees. Treated here as cash rather than borrowed.

Purchase tax

A government levy on property transactions, named differently in different countries. Often the largest single buying cost.

Cash to close

The total you must have available at completion: your deposit plus all buying costs. Always larger than the deposit alone.

Reserves

Savings remaining after completion. Some lenders require them, and every household benefits from having them.

Equity

The share of the property you own outright. Your deposit is the equity you start with on day one.

Threshold or band

A loan-to-value level at which lender pricing changes, commonly at 95%, 90%, and 80%. Crossing one changes terms in a step.

Principal and interest

The part of a monthly payment that services the loan, as distinct from tax and insurance collected alongside it.

Gift funds

Deposit money provided by a family member. Most lenders permit it but require documentation confirming it is not a loan.

Valuation

A lender’s assessment of the property’s worth. If it lands below the agreed price, the shortfall must be covered in cash.

Earnest money

A good-faith deposit paid when an offer is accepted in some markets. It usually counts toward the final deposit.

Amortization

The gradual repayment of the loan through scheduled payments. A smaller loan amortizes to zero with far less interest.

Total interest

All interest paid across the life of the loan. A larger deposit reduces it disproportionately over long terms.

Affordability

What your income and debts can support. It sets the loan; the deposit sets how much house that loan reaches.

Term

The length of the loan. It interacts with the deposit: a bigger deposit or a shorter term both cut total interest, by different routes.

Underwriting

The lender’s full assessment before a decision. Deposit size and its source are both examined.

Seller contribution

An amount a seller agrees to put toward the buyer’s costs. Where permitted, it reduces cash needed at completion.

Common mistakes, and what this page will not do

• Saving the deposit but not the buying costs. Fees and purchase taxes are paid in cash at completion. The amount you need is always larger than the deposit itself.
• Ignoring which loan-to-value band you land in. Lenders price in steps. Being just below a threshold can cost more each month than a much larger change elsewhere in the range.
• Overlooking mortgage insurance in the comparison. A small deposit usually brings a monthly premium that builds no equity. It often outweighs the interest difference on the loan.
• Emptying every account to reach a threshold. Completing with no reserves turns a manageable purchase into a fragile one, and some lenders test for reserves directly.
• Assuming insurance disappears on its own. Removal is rarely automatic. It usually requires reaching an equity level and asking, sometimes with a fresh valuation.
• Forgetting the valuation can come in low. Lenders lend against their valuation, not the agreed price. Any shortfall increases the cash you must provide.
• Not documenting gifted deposit funds. Most lenders accept gifts but require evidence that the money is not a loan. Unexplained deposits can delay or derail an application.
• Delaying indefinitely to reach a larger deposit. More saving is not free. It means more rent and exposure to whatever prices and rates do meanwhile, which can outweigh the gain.
• Treating the deposit as the only lever. Term, rate, and existing debt all move the payment too. A deposit decision is best made alongside them, not in isolation.

What this calculator leaves out: This calculator does not add closing costs to the loan, calculate mortgage insurance premiums, verify the source of your deposit, guarantee a valuation, apply country-specific purchase taxes or programme rules, or estimate what a lender would approve. It works out the loan, the deposit percentage, and the cash needed from the figures you enter.

Frequently asked questions