Mortgage Planning
Down Payment Impact on Affordability and PMI
This walkthrough explains how your down payment changes LTV, loan size, and PMI/LMI, with two round-number examples and tips on testing scenarios safely.
Published: January 1, 2026 · Updated: January 1, 2026 · By FinToolSuite Editorial
Open the stress tester
Test two down payment scenarios and compare safe loan, DTI tails, and PMI/LMI lines.
Disclaimer
- Educational only. Insurance rules vary. Examples are illustrative. No guarantees.
- Results depend on inputs and assumptions.
LTV and PMI/LMI basics
Loan to value (LTV) links down payment to loan size. Higher down payments lower LTV and can reduce or remove PMI/LMI depending on the thresholds you enter in the tool.
Example 1: Smaller down payment
Price $400,000, 10% down ($40,000). Loan $360,000, LTV 90%. PMI/LMI may apply; monthly cost might show around a couple hundred dollars depending on your percent input.
Example 2: Larger down payment
Price $400,000, 20% down ($80,000). Loan $320,000, LTV 80%. PMI/LMI may drop off; monthly cost can fall, and DTI tails may tighten.
How to test safely
Save a scenario, duplicate it, change only the down payment, and compare safe loan, DTI percentiles, PMI/LMI line, and default probability directionally. Keep other assumptions identical.
FAQs
Do I enter PMI/LMI percent?
Yes, enter the rate and threshold so the line item shows up correctly.
Is higher down always better?
It lowers LTV but ties up cash. Use scenarios to see tradeoffs. This is not advice.
How do I note cash needs?
Add closing costs and buffers separately; see related posts on buffers and closing costs.
Where is privacy info?
See Privacy Policy.
Test down payments
Open the mortgage affordability stress tester, run two down payment scenarios, and compare outputs side by side.