How to use the moving down payment savings calculator
- Enter the price of the home today and the yearly price change you assume.
- Enter the down payment and the closing costs as percents, and the months until you want to buy.
- Enter what you have saved and the yearly return on savings. Use 0 for cash that earns nothing.
- Optionally open the advanced options and enter a monthly amount you can save, to see the shortfall and how long it takes.
Formula
price when you buy = price today x (1 + yearly change)^(months / 12)
cash needed = price when you buy x (down payment percent + closing cost percent)
monthly deposit = (cash needed - savings x g) x i / (g - 1), with i = yearly return / 12 and g = (1 + i)^months
with no return, monthly deposit = (cash needed - savings) / months
Deposits are made at the end of each month. When you enter a monthly amount, the tool checks each month in turn, because the target keeps moving as prices change.
A $400,000 home in 36 months
If prices rise 3% a year, a $400,000 home costs 400,000 x 1.03^3 = $437,090.80 in 36 months. With a 10% down payment and 2% closing costs, you need 12% of that, which is $52,450.90 instead of $48,000 today. With no savings and no return, the monthly deposit is $1,456.97.
Starting with $12,000 and earning 4% a year, the deposit falls to $1,019.44. Saving $1,200 a month under those conditions reaches the moving target in month 31 and leaves you $6,894.24 ahead after 36 months.
A target that moves
Most savings calculators treat the goal as fixed. If prices rise while you save, you chase a bigger number, and the longer the plan, the larger the gap. If prices fall, the target shrinks. This tool lets you set the direction and the size of the change, so you can see how much it matters over your timeline.
For a fixed price, use the Down Payment Calculator to see the loan and payment, and the Savings Goal Calculator for goals that do not move. The Mortgage Affordability Calculator shows what your income supports.
Choosing the assumptions
The price change and the return are assumptions, not forecasts. Run a few values, including zero and a negative one, to see a range. Savings in a bank account will earn something quite different from savings invested in markets, and taxes on the returns are not included.
Assumptions and limits
- The price changes at a steady yearly rate, which is compounded monthly in the formula.
- Down payment and closing costs are percents of the future price.
- Savings earn the yearly return divided by 12 each month, and deposits arrive at month end.
- Taxes, fees and the chance of a loss on investments are not modeled.
- These are projections for planning and not financial advice.
Frequently asked questions
What price change should I use?
Use your own view of the local market, and also try zero. Past changes do not guarantee future ones.
Why does the deposit fall when I add a return?
Interest on what you have saved does part of the work, so you need to deposit less to reach the same target.
What does the months to reach figure mean?
It is the first month in which your balance at the monthly amount you entered is at least the target for that month.
Is the closing cost percent of the price?
Yes, it is applied to the future price, like the down payment.