A down payment does three jobs at once: it shrinks the loan, it sets your loan-to-value ratio, and it decides whether you will pay for mortgage insurance. This calculator works in both directions — price plus percentage (or amount) to loan figures — and its savings mode answers the follow-up question: how long until you have the down payment at all?
Mode 1: Price, Down Payment, Loan
Enter the price and either the down payment amount or the percentage; the other is derived:
The verdict line is the PMI flag: at an LVR above 80% — a down payment under 20% — conventional lenders require private mortgage insurance, so the calculator reports PMI required whenever the ratio crosses that line.
Worked example: a 67,500**, loan **160–90,000), the LVR is 80% and the flag switches off.
Where the 20% myth misleads: it is an insurance threshold, not an entry requirement. Common US programs start far lower — conventional loans from 3–5% down for qualified buyers, FHA at 3.5% (with its own mortgage insurance premiums, which behave differently and may last the loan's life at low down payments), and VA and USDA loans at 0% for eligible borrowers, each with funding or guarantee fees instead of PMI. The right down payment balances three things: the insurance drag of a small down payment, the opportunity cost of cash locked in the house, and keeping a genuine emergency reserve after closing — plus closing costs of roughly 2–5% of price that sit on top of the down payment and are not in this calculation.
Mode 2: Time to Save
Give it a savings goal, what you already have, a monthly contribution, and an expected annual return, and it simulates month by month — balance grows by the monthly return, then the contribution lands — until the goal is reached (capped at 600 months):
Worked example: goal 10,000 saved, **80,800 in total; compound growth adds **90,268. Set the return to 0% — money in a plain checking account — and the same goal takes visibly longer with growth at exactly $0; that contrast is the honest way to see what a high-yield savings account buys you (and why money needed within a couple of years belongs somewhere stable rather than invested for return).
Reading the Two Modes Together
Run mode 2 first to find your date, then mode 1 at the price that date's savings can support — or invert it: mode 1 at your target price tells mode 2 its goal. If the timeline disappoints, the levers are exactly the inputs: a larger monthly contribution shortens it roughly proportionally, a lower price target cuts the goal itself, and a smaller percentage (accepting PMI for a defined period) trades insurance cost for years of earlier ownership. The mortgage calculator picks up where this one stops, turning the resulting loan amount into payments.
Frequently Asked Questions
Is 20% down actually necessary?
No. It is the threshold that avoids PMI on conventional loans — nothing more. Millions of buyers purchase with 3–5% down; the trade is mortgage insurance and a larger loan against years of additional saving while renting. Run both scenarios through the two modes and compare total cost, not slogans.
What is the difference between LVR and LTV?
None in substance — loan-to-value ratio, written LVR in Australian and some other markets and LTV in the US. This calculator computes it against the purchase price; note lenders may use the appraised value instead when the two differ, taking the lower figure.
Does the savings mode account for taxes or inflation?
No. The return you enter should be your expected after-tax return, and the goal is in nominal dollars — if your target purchase is years away and prices are rising, raise the savings goal to the price you expect to pay then, not today's price.