**What is the downpayment?**

The down payment is a type of the payment made in cash while purchasing the property. It is the initial upfront portion of the total amount. The downpayment is important to the lenders and offers a certain degree of assurance. The larger down payments lower risk for the borrowers. The downpayment decreases the amount of interest paid over the time period of the loan and lowers the monthly payments.

**Benefits
of a down payment:**

**Interest
savings: **The larger down payments
is like an investment that yields a return that includes a part of the rate of
interest on the money the borrower is not borrowing.

**Points:** Loan fees or pay points expressed as a percentage of
the loan amount.

**Mortgage
insurance: **The mortgage insurance can
be eliminated or reduced when large down payments are made.

**Dropping
the loan below the conforming loan limit: **The
large downpayment reduces the rate of interest and lowers the loan amount and
confirms loan limit.

**Different
loans and different downpayment requirements:**

**Conventional
loan: **The downpayment required
is 20% and in some cases, it is lower 20% based on lenders. If the downpayment
is less than 20% the borrower is asked to purchase private mortgage insurance.

**FHA
loan: **The downpayment required
by 3.5%. The US federal housing administration (FHA) provides insurance for the
primary residence homebuyers.

**VA
loan: **This loan doesnâ€™t need any
downpayment. As this loan is assured by the Department of Veterans Affairs.

**Closing
cost: **The general estimation of
closing cost is around 3% of the purchase.

**The
components required for the downpayment calculator:**

**For
calculating if upfront cash available:**

- The upfront cash available.
- Down payment.
- Interest rate.
- Loan term.

**For
calculating the home price:**

- Home price.
- Downpayment.
- Interest rate
- Loan term.

**For
calculating home and upfront cash available:**

- Home price.
- Upfront cash available.
- Interest rate.
- Loan term.

With is calculator you can calculate the loan estimation in three variations like home price, upfront cash availability and both.