# Down Payment Assistance Savings Calculator Value a grant, forgivable, deferred or repayable second against mortgage insurance saved and years of saving avoided. --- - **Canonical URL:** https://dothecalculation.com/calculators/down-payment-assistance-savings-calculator - **Category:** Real Estate & Property - **Publisher:** Do The Calculation (https://dothecalculation.com) - **Cost:** Free, no account or sign-up required - **Privacy:** Runs entirely in the browser; inputs are never sent to a server - **Methodology:** https://dothecalculation.com/methodology --- ## What Is Down Payment Assistance Actually Worth? Price a grant, a forgivable second, a deferred loan or a repayable second against each other — including the mortgage insurance a bigger down payment avoids and the years of saving it replaces. - All four programme structures, which are worth very different amounts - Mortgage insurance and interest saved on the smaller first mortgage - The forgiveness cliff, priced against how long you actually expect to stay ## Quick Answer — Which Kind of Down Payment Assistance Is Worth Most? Assistance comes in four structures, and the headline dollar amount tells you almost nothing about what it is worth. **A grant** is never repaid. **A forgivable second** is written off over a residency period. **A deferred loan** is repaid in full when you sell or refinance. **A repayable second** amortises monthly like any other loan. **A $340,000 home with $10,200 of your own money (3 percent) and $15,000 of assistance, at a 6.5 percent first mortgage rate over 30 years with 0.55 percent annual mortgage insurance:** • Down payment rises from **3.0 percent** to **7.41 percent** • First mortgage falls from **$329,800** to **$314,800** • Loan-to-value falls from **97.0** to **92.59 percent** • Monthly cost falls from **$2,235.72** to **$2,134.03** — **$101.69** less • First-mortgage interest saved over seven years — **$6,526** **What it is worth depends entirely on the structure and how long you stay.** A grant is worth **$15,578** including mortgage insurance saved. A five-year forgivable second is worth the same **$15,578** if you stay seven years, and only **$9,248** if you leave after three — a **$6,330** cliff sitting between two perfectly ordinary outcomes. ## How to Use This Calculator: A $340,000 First Purchase Enter the **home price**, **your own down payment**, and the **assistance amount** separately. Here $10,200 of savings — a 3 percent down payment — plus $15,000 of assistance, which together get you to 7.41 percent down. Pick the **structure**, because it dominates everything else. Then set **how long you expect to stay**, which is the input people guess at and which decides the answer on forgivable and deferred programmes. For a **five-year forgivable second** with a **seven-year** stay, the whole $15,000 is forgiven and nothing is owed at exit. Change the stay to **three years** and $9,000 is forgiven, $6,000 is still owed, and the net benefit drops from $15,578 to $9,248. Enter the **first mortgage rate, term and mortgage insurance rate**. At 6.5 percent over 30 years the smaller loan saves **$94.81** a month in principal and interest, and slightly less mortgage insurance because the balance is lower. Over a seven-year stay, the interest saved on the first mortgage alone comes to **$6,526**. Finally, enter **what you could save each month instead**. At $600 a month, accumulating $15,000 takes **25 months** — just over two years of renting, and two more years of whatever the market does. That is often the strongest argument for taking assistance even when its cash value is modest. ## The Formulas This Calculator Uses **Grant:** forgiven in full, nothing owed at any point. **Forgivable:** amount forgiven = Assistance × min(1, Years in home ÷ Forgiveness years); the remainder is owed at exit. **Deferred:** owed at exit = Assistance × (1 + rate × Years in home), using simple interest, and often at a zero rate. **Repayable:** an amortising second lien; the amount owed at exit is the remaining balance after the months you have paid. **Net benefit** = Assistance − Owed at exit − Interest paid on the assistance + Mortgage insurance saved over the stay. Mortgage insurance is dropped once loan-to-value reaches 80 percent, which is why an assistance amount that crosses that threshold is worth far more than one that does not. The **monthly difference** is reported separately from the net benefit on purpose. Most of a lower monthly payment reflects borrowing less rather than being given more — the genuinely new money is the interest avoided, which the calculator shows on its own line. ## A Second Example: When Assistance Eliminates Mortgage Insurance Take a **$500,000** home where the buyer has **$50,000** saved and a programme offers a **$50,000 deferred loan** at zero percent, repayable on sale, with an eight-year expected stay. On savings alone the down payment is 10 percent and loan-to-value is **90 percent**, so mortgage insurance applies: **$187.50** a month at a 0.5 percent annual rate. With the assistance, the down payment reaches 20 percent, loan-to-value hits **80 percent exactly**, and mortgage insurance **disappears entirely**. The monthly cost falls from **$3,031.81** to **$2,528.27** — **$503.53** a month. Over eight years the mortgage insurance saved alone is **$18,000**, and that is the net benefit figure the calculator reports, because the $50,000 itself is repaid in full at sale. This is the case where assistance is worth far more than its face value suggests on paper, and it is worth checking deliberately: an amount that takes loan-to-value from 90 to 80 percent buys something an equivalent amount from 97 to 92 percent does not. **The contrasting case.** A **$280,000** home with **$8,400** saved and a **$12,000 repayable second at 3 percent over ten years**, staying six years. The assistance payment is **$115.87** a month, and the total monthly housing cost rises from **$1,852.50** to **$1,886.52** — **$34.02 more** than buying without it. The smaller first mortgage does not offset the second lien payment. The net benefit is still **$5,619** at exit, because six years of payments have retired most of the second lien while mortgage insurance was slightly lower throughout. But the monthly picture is worse, and a buyer who assumed assistance always lowers the payment would be surprised at closing. ## What to Check Before Accepting Assistance **The recapture period.** A forgivable second forgiven over five years is worth nothing at all in year zero and everything in year five. If there is any chance you move for work, upsize, or refinance within that window, price the early-exit case before signing rather than after. **Whether refinancing triggers repayment.** Many deferred and forgivable programmes come due on refinance as well as on sale. In a falling-rate environment that can lock you out of a refinance that would otherwise be obviously worth doing, and the cost of that constraint does not show up anywhere on a programme brochure. **Whether the first mortgage rate is competitive.** Some programmes require you to take their first mortgage, and a rate a quarter point above market on a 30-year loan can quietly cost more than the assistance is worth. Price the package rather than the assistance. **The eligibility conditions.** Income caps, purchase price limits, first-time-buyer definitions that often include anyone who has not owned for three years, homebuyer education requirements and occupancy conditions all vary by state and city, and several are checked again after closing. **Whether the money is the constraint at all.** If the barrier is the down payment, assistance is transformative. If the barrier is the monthly payment or the debt-to-income ratio, it may not help — the [home affordability calculator](/calculators/home-affordability-calculator) tests that directly, and the [down payment calculator](/calculators/down-payment-calculator) sizes the cash target before you go looking for help with it. ## Limitations Programme rules are local, numerous and change often. There are thousands of down payment assistance programmes across the United States run by states, counties, cities, employers and non-profits, and their terms differ in ways no calculator generalises. Use this to compare offers you have in hand, not to work out what you qualify for. Net benefit here is the cash value of the assistance net of repayment, plus mortgage insurance saved. It deliberately does not add the full monthly payment difference, because most of that reflects borrowing less rather than receiving more. The genuinely new money — interest avoided on a smaller first mortgage — is shown on its own line. The deferred and forgivable models use simple interest and a straight-line forgiveness schedule. Real programmes sometimes forgive in annual steps, sometimes forgive nothing until the end of the period, and occasionally charge a below-market rate that accrues. Read the note. Mortgage insurance is modelled as a conventional annual rate that stops at 80 percent loan-to-value. FHA mortgage insurance behaves differently and in many cases lasts the life of the loan regardless of equity, which changes this calculation substantially. Nothing here is advice about which programme to take, and this is not tax guidance. Some assistance has tax consequences, particularly forgiven debt, and that is a question for a professional. ## Related Calculators Before looking for assistance it helps to know the target: the [down payment calculator](/calculators/down-payment-calculator) sizes the cash needed at various down payment percentages, and the [down payment savings guide](/blog/finance/down-payment-savings-plan) covers building a realistic plan including closing costs and the cushion you still need after closing. The [home affordability calculator](/calculators/home-affordability-calculator) checks whether the monthly payment works once the down payment question is settled, and the [mortgage calculator](/calculators/mortgage-calculator) runs the amortisation on whichever first mortgage you end up with. Assistance is usually paired with a government-backed first mortgage, and the [FHA/VA loan affordability calculator](/calculators/fha-va-loan-affordability-calculator) works out what those programmes support on your income before assistance is layered on top. ## Frequently asked questions ### What are the types of down payment assistance? Four. A grant is never repaid. A forgivable second is written off over a residency period, commonly five to ten years. A deferred loan is repaid in full when you sell or refinance, often at zero interest. A repayable second amortises monthly like any other loan. The same headline amount is worth very different sums across those four. ### How much is down payment assistance actually worth? It depends on the structure and how long you stay. A $15,000 grant on the worked example is worth $15,578 including mortgage insurance saved. The same $15,000 as a five-year forgivable second is worth $15,578 if you stay seven years and $9,248 if you leave after three. ### What happens if I sell before a forgivable loan is forgiven? You repay the unforgiven balance. On a $15,000 second forgiven straight-line over five years, leaving after three years means $9,000 is forgiven and $6,000 is owed at closing. That $6,330 swing in net benefit is why the expected length of stay is the most important input on this page. ### Does down payment assistance eliminate mortgage insurance? Only if it takes loan-to-value to 80 percent or below. A $50,000 deferred loan on a $500,000 home with $50,000 already saved moves LTV from 90 to exactly 80 percent and removes mortgage insurance entirely — worth $18,000 over eight years, on top of a smaller loan. ### Can down payment assistance increase my monthly payment? Yes, when it is a repayable second. A $12,000 second at 3 percent over ten years adds $115.87 a month, and on a $280,000 purchase that more than offsets the saving on a smaller first mortgage — total monthly housing cost rises by $34.02. It can still be the right trade if it gets you into the house, but it is not a saving. ### Does refinancing trigger repayment of assistance? Often, yes. Many deferred and forgivable programmes come due on refinance as well as on sale, which can lock you out of an obviously worthwhile refinance if rates fall. Check this specifically before accepting, because it does not appear on most programme summaries. ### How long would it take to save the same amount instead? At $600 a month, accumulating $15,000 takes 25 months — just over two years. That is two more years of rent and two more years of whatever house prices do, which is frequently a stronger argument for taking assistance than its cash value is. ### Do I have to be a first-time buyer? Usually, but the definition is broader than it sounds. Most programmes define a first-time buyer as anyone who has not owned a principal residence in the last three years, which brings a lot of previous owners back into eligibility. Income caps, purchase price limits and homebuyer education requirements vary by programme. ## Related concepts - **Forgivable Second Mortgage** — Assistance written off over a residency period, commonly five to ten years. Worth its full amount only if you stay past the end of that window. - **Deferred Loan** — Assistance with no monthly payment, repaid in full on sale or refinance. Its value is the interest-free use of the money plus any mortgage insurance avoided. - **The 80 Percent Threshold** — Where conventional mortgage insurance drops. Assistance that crosses it is worth far more than an equivalent amount that does not. ## Related guides - [Down Payment Savings Guide: Cash Target, Closing Costs, and Timeline Planning](https://dothecalculation.com/blog/finance/down-payment-savings-plan) — Build a realistic down payment plan by including closing costs, savings pace, PMI tradeoffs, and the cash cushion you still need after closing. - [Home Affordability: Budget, Formula, and Calculator](https://dothecalculation.com/blog/finance/home-affordability-analysis) — Estimate a home-price range from income, debt, down payment, rate, taxes, and insurance, then test costs the DTC model does not include. ## Related calculators - [Second Mortgage Calculator](https://dothecalculation.com/calculators/second-mortgage-calculator) — Borrowing capacity against a combined loan-to-value ceiling, the payment, and the blended rate across both liens. - [Biweekly Mortgage Payment & Payoff Accelerator](https://dothecalculation.com/calculators/biweekly-mortgage-payoff-calculator) — Compare biweekly versus monthly mortgage payment schedules to calculate how much faster you pay off your loan and total interest saved. - [Mortgage Discount Points Break-Even Calculator](https://dothecalculation.com/calculators/mortgage-points-break-even-calculator) — Calculate the break-even timeline and total interest savings from paying upfront mortgage discount points to buy down your interest rate. - [Mortgage Recast Calculator](https://dothecalculation.com/calculators/mortgage-recast-calculator) — Re-amortise a mortgage after a lump sum: new payment, interest saved, and the prepay alternative side by side. - [Down Payment Calculator](https://dothecalculation.com/calculators/down-payment-calculator) — Plan the savings needed for a home down payment and see how it affects your loan amount and monthly mortgage payment size. - [Home Equity Calculator](https://dothecalculation.com/calculators/home-equity-calculator) — Calculate your current home equity, loan-to-value ratio, borrowing capacity, and projected equity after years of appreciation. --- _There are thousands of down payment assistance programmes across the United States, run by states, counties, cities, employers and non-profits, and their terms differ in ways no calculator generalises — use this to compare offers you have in hand rather than to establish what you qualify for. Net benefit is the cash value of the assistance net of repayment plus mortgage insurance saved; it deliberately excludes the full monthly payment difference, because most of that reflects borrowing less rather than receiving more. Forgiveness is modelled straight-line and deferred interest as simple, where real programmes vary. Mortgage insurance is modelled as conventional coverage ending at 80 percent loan-to-value; FHA insurance often lasts the life of the loan and changes this calculation substantially. Forgiven debt can have tax consequences, which is a question for a professional._ --- _Source: [Do The Calculation](https://dothecalculation.com/calculators/down-payment-assistance-savings-calculator). Quote freely with attribution and a link to this page._