Mortgage Calculator

The traditional target is 20%, because that's the threshold at which you avoid PMI and typically qualify for better interest rates. But 20% is a substantial barrier — on a ₹10,000,000 home it's ₹2,000,000 upfront — and there are good arguments for putting down less and investing the difference if your expected investment returns exceed your mortgage rate. The right answer depends on your liquidity, your interest rate, and whether you're paying PMI. At minimum, avoid going below 10% if you can — smaller down payments mean larger loans, higher PMI, and less equity cushion if property values dip.

PMI stands for Private Mortgage Insurance. It's a policy that protects the lender (not you) in case you default, and it's required when your down payment is less than 20%. Typical PMI costs run 0.5 to 1.5% of the original loan amount per year, split into monthly payments. Under the Homeowners Protection Act, you can request PMI cancellation when you reach 20% equity through payments, and it must be automatically terminated at 22% equity based on the original schedule. You can also get it removed earlier if your home has appreciated and an appraisal confirms 20% equity.

A 15-year mortgage typically comes with a lower interest rate and you pay dramatically less total interest — often less than half compared to a 30-year loan. The monthly payment is significantly higher, though, usually 40 to 50% more. A 30-year mortgage gives you lower monthly payments and more cash flow flexibility, but you'll pay two to three times more in total interest over the life of the loan. One common approach is taking the 30-year loan but making extra principal payments when your budget allows — you get the flexibility of the lower required payment with the ability to pay it off faster when things are going well.

The common rule of thumb is to keep PITI (principal, interest, taxes, insurance) below 28% of your gross monthly income, and all debt payments combined below 36%. Lenders will often approve you for more than this — banks are in the business of lending — but their approval limit and what you can actually live comfortably within are not the same number. Leave room in your budget for maintenance (budget 1 to 2% of home value per year), utilities, and life's other financial curveballs. A mortgage that consumes 35% of your take-home pay doesn't leave much room for any of that.

It can be dramatic, especially early in the loan. On a 30-year mortgage, making one extra monthly payment per year can cut 4 to 5 years off the loan and save tens of thousands in interest. Adding a fixed extra amount each month, say an extra ₹5,000 to ₹10,000, has a similar compounding effect over time because each extra rupee of principal reduces the base on which future interest is calculated. The earlier in the loan you start, the bigger the impact — because you're reducing the principal during the years when the interest portion of your payment is highest.

When you sell, the proceeds from the sale are used to pay off your remaining mortgage balance at closing. Whatever is left after repaying the loan (and agent fees, closing costs, etc.) is your equity — the portion you keep. If you sell for less than the outstanding balance, that's called being "underwater" or having negative equity, and you'd need to bring cash to closing to make up the difference. This is why putting a meaningful down payment is a buffer against this scenario, especially in the early years of the loan when your equity is lowest.

Closing costs are fees paid at the time you finalize the mortgage — separate from the down payment. They typically include loan origination fees, appraisal fees, title insurance, escrow setup, government recording fees, and sometimes prepaid items like the first year of homeowner's insurance or a few months of property tax. In the US, closing costs typically run 2 to 5% of the loan amount. In other markets, costs vary but are rarely zero. Budget for them separately from your down payment — a buyer putting 20% down on a ₹10,000,000 home also needs to cover potentially ₹200,000–500,000 in closing costs on top of the ₹2,000,000 down payment.