How the calculator works
Your goal is the down payment plus closing costs. The calculator multiplies the home price by your down payment percentage and your closing-cost percentage. If you expect prices to rise, it grows the home price by that rate each month, so the goal moves while you save.
Each month, your balance earns one month of interest (the monthly rate that compounds to your APY over a year) and then gets your new deposit. The first month your balance reaches the goal for that month is your answer. The simulation stops at 50 years. If you never catch the goal, prices are growing faster than your savings.
In “How much to save each month” mode, the calculator works backward. It grows what you have today to the target date, subtracts that from the goal, and solves for the equal monthly deposit that covers the gap with interest.
Worked example
You want a $450,000 home with 10% down. You assume closing costs of 3%. Your goal is 13% of $450,000, or $58,500. You have $15,000 saved, add $1,200 a month, and earn 4% APY.
- With flat prices you reach the goal in 34 months (2 years 10 months).
- By then you have put in $55,800 of your own money. Interest adds about $4,000.
- If prices instead rise 3% a year, the goal grows to about $64,200 and it takes 38 months.
- To buy in exactly 3 years with flat prices, you need about $1,091 a month.
Minimum down payments by loan type
You may not need 20% down. These are the lowest standard down payments for the main loan types. Lenders can ask for more.
| Loan type | Minimum down | Main conditions |
|---|---|---|
| Conventional (Freddie Mac Home Possible) | 3% | Up to 97% loan-to-value; income limited to 80% of area median income |
| FHA | 3.5% | Credit score 580 or higher. Scores of 500 to 579 are limited to 90% loan-to-value (10% down) |
| VA | 0% | Eligible veterans, service members and some surviving spouses; price not above appraised value |
| USDA guaranteed | 0% | Eligible rural areas; income limits apply |
Under 20% down, a conventional loan usually adds private mortgage insurance. See how much it costs and when it ends with the PMI calculator. FHA loans charge their own mortgage insurance; the FHA loan calculator shows it. VA loans have no monthly mortgage insurance but most borrowers pay a one-time funding fee, which the VA loan calculator includes.
Things the calculator does not include
- Taxes on interest. Savings interest is usually taxable, so your real growth is a bit lower.
- Changing rates. Savings APYs move with the market. Update the rate when your bank changes it.
- Cash reserves. Lenders, and many co-op boards, may want savings left over after closing. Plan for that on top of the goal.
- Gifts and assistance. A gift from family or a down payment assistance program can shorten the timeline a lot.
What to do next
Check what price range makes sense with the home affordability calculator, then read how much down payment you need and how to save for a down payment. If family is helping, read the rules on gift money for a down payment.