Saving up for a down payment might be one of your biggest priorities if you’re looking to buy a home soon. How much you put down affects many parts of your home financing, including your monthly payments, mortgage rates, and total interest paid.

This down payment calculator will help you better understand how the money you put down now will affect your finances for years to come. For a breakdown of the terms used, refer to the section below the tool.

Important Terms to Know for the Down Payment Calculator

Here’s a breakdown of the terms that you’ll find on the down payment calculator.

Down payment

Before we get into low and high down payments, let’s talk a little bit about what a down payment is. Simply put, a down payment is a type of payment made when you first purchase a home (or any large purchase, for that matter). Typically, it is paid with cash upfront and represents a percentage of the full purchase price.

The standard down payment amount is 20% of the home’s purchase price, although not all loans require this much. You’ll find some loans that allow people to purchase a home with as little as 3.5% down.

A few things to know about down payments:

• The larger your down payment is, the smaller your loan will be. The smaller your loan is, the less you’ll have to pay in interest.
• Larger down payments also decrease your monthly mortgage loan payments.
• Because a higher down payment offers the lender greater security, you may be able to obtain a better interest rate as well.
• Mortgage lenders often have a minimum down payment that home buyers must make.

Because of these benefits, many people save up for a larger down payment instead of buying a home sooner with less money down. Use this mortgage calculator to weigh the benefits of a high vs. low down payment.

High down payment

The calculator allows you to compare putting down a more significant down payment or a smaller one. Under High Down Payment, input the most you’d be able to put down.

Low down payment

Under Low Down Payment, write a number lower than your high down payment amount.

This payment could represent the amount you would put down if you bought the house today, whereas the high down payment could be the amount you saved up for an extra year or two.

Purchase price

Purchase price refers to the selling price of the home. This home price includes your down payment, plus the remaining amount you might have to finance through a lender.

Loan rate

Loan rate, which you might commonly hear referred to as the interest rate, is what a lender charges in exchange for letting you borrow their money. It is calculated as a percentage of the loan balance.

On a traditional fixed-rate mortgage, this percentage is fixed and will not fluctuate over the life of the loan. Adjustable-rate mortgages (ARMs), on the other hand, have interest rates that are subject to change. This calculator assumes a fixed-rate mortgage that does not change over time. Several factors that determine your loan’s interest rate, including your credit score and history, the location of the house, the loan amount, loan type, and of course, the size of your down payment.

Pay off period

In this calculator, the pay off period slider allows you to see your down payment effects at different times. So, for example, if you selected your payoff period as two years, you’d see where’d you be standing after two years of making payments.

Pay off period is NOT the same as the loan term.

Savings rate

[Not sure what this term is referring to]

Loan term

The loan term is just another way to say the total length of the loan. The most common loan term is 30 years, but nowadays, it’s also common to see 15-year and 20-year loans.

Like down payments, loan terms affect your monthly payment size. A mortgage with a longer-term means smaller monthly payments paid over a longer period. On the other hand, a mortgage with a shorter term will have larger payments, but the borrower will repay the money much sooner.

Tax rate

[Unsure if this is property tax or??]

Monthly payment

Mortgages are repaid in monthly installments. Under Results, the calculator shows what your payments would look under each scenario. Keep in mind that the calculator doesn’t account for every aspect of a monthly payment, such as insurance, which can vary from home to home.

Tax benefit

[This is related to the tax rate ??]

Equity

Equity is the value of a homeowner’s interest in the property. As a homeowner pays off the principal balance on their mortgage, equity increases. When you make a larger down payment, you immediately have more equity in your house than if you were to put a smaller chunk down.

Aside from having a larger down payment and paying off more of your loan, your home’s appreciation can increase your equity.

More Calculator Resources

If you found this tool helpful, be sure to check out Amplify Credit Union’s page of calculators. You’ll find resources to help get your finances in order and tools for everything from college savings to purchasing a home.