Down Payment
Down Payment
The cash paid up front on a purchase: the price times the down-payment percentage. The loan finances the rest.
When to use: Use to turn a target percentage into dollars, or to see what a given savings balance buys at a required percentage down.
Formula
Variables
| Symbol | Name | Description | Unit |
|---|---|---|---|
| DownPayment | Down Payment | Cash paid at closing | $ |
| PropertyValue | Purchase Price | Price of the property | $ |
| DownPct | Down Payment Fraction | Down payment as a fraction of price | % |
Real-Life Examples
Example 1: Conventional 20%
A $400,000 home with 20% down.
Given
PropertyValue = $400,000.00DownPct = 20.0000%
Step-by-Step
1.Down = 400,000 × 0.20
2.Down = $80,000.00
Result:$80,000.00
An $80,000 down payment leaves a $320,000 mortgage at 80% LTV.
Example 2: FHA Minimum 3.5%
A $275,000 home with the FHA minimum of 3.5% down.
Given
PropertyValue = $275,000.00DownPct = 3.5000%
Step-by-Step
1.Down = 275,000 × 0.035
2.Down = $9,625.00
Result:$9,625.00
Under $10,000 gets the buyer in, at the cost of a 96.5% LTV loan with mortgage insurance for its life.
Frequently Asked Questions
No. Closing costs are paid on top, typically another 2 to 5 percent of the price.