How to calculate how much is needed for a down payment on a house

Written by alysonnolan
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How to calculate how much is needed for a down payment on a house
A proper down payment can help people afford houses. (coins image by Petr Gnuskin from

You have just tied the knot, and now you are ready to move into your dream home. You want to know how much of a deposit you need to put down on your home so that you can afford the payments in the future. Properly planning for your future finances will help reduce stress. A proper down payment will reduce additional costs associated with buying a house.

Skill level:


  1. 1

    Shop around for a house in a price range you are comfortable in purchasing. Remember that there are many other costs associated with buying a house other than just the purchase price. For example, a couple finds a house for £91,000 and estimates other expenses, such as closing costs, to be £3,250. Therefore, the total house price is £94,250.

  2. 2

    Consult with your Realtor, accountant or anyone else who knowledgeable in house payments to determine a good down payment. Typically, a homeowner should shoot for a 20 per cent down payment. A down payment of this size gives you more equity in the home immediately, and lower lifetime interest costs, because you're paying off a smaller loan. Lenders generally require a 20 per cent down payment; however, they may accept 3 per cent to 5 per cent if you carry private mortgage insurance--another expense you can avoid with the larger down payment.

  3. 3

    Multiply the total price of the house by the recommended down payment. In our example, £94,250 x 20 per cent = £18,850 for the down payment on the couple's dream house.

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