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The down-payment decision
Start with the cash and monthly payment you can afford. Then compare buying now with saving for a larger down payment.
1. What can you afford now?
Estimated home-price budget
$397,375
Estimated PITI + PMI $3,000/month · cash needed $27,816 · cash left $22,184. Limited by monthly payment.
PITI is principal, interest, property taxes and homeowners insurance. PMI is added separately when required. The price also leaves your $5,000 cash reserve. Uses 5% down, 7% interest and 2% closing costs; change these below. This budget estimate does not establish loan approval.
2. Buy now or wait?
This comparison assumes no ADU or rental income. Compare buying with rental income instead.
Buy now: $157/month · $1,888/year
Buy later: $0/month · $0/year
Buy now: $232/month · $2,782/year
Buy later: $247/month · $2,958/year
Buy now: $99/month · $1,192/year
Buy later: $106/month · $1,268/year
Taxes and insurance use annual percentages of purchase price; the dollar estimates above use the buy-now and later home prices in the selected comparison. Defaults of 0.7% and 0.3% are examples—confirm the actual tax bill and insurance quote. The monthly payment includes PITI and any PMI. Home Maintenance is deducted separately from homeowner cash each month; it does not increase the mortgage payment or reduce the estimated home-price budget. Utilities, replacement reserves and other ownership expenses are excluded. At 20% down or more, later mortgage insurance is $0 in this conventional-loan example. Below 20%, the annual PMI rate (default 0.5%) is applied to each original loan amount; the dollar summaries show initial PMI. The projection assumes approved PMI cancellation below 80% of estimated value, with scheduled automatic termination as a fallback. Actual servicer requirements can be stricter. Upfront premiums are excluded.
Example assumptions: 3% annual home price growth, 3% annual increase in rent. Savings earn no interest; the housing-plus-saving budget stays constant. Taxes and insurance scale with the later purchase price, then stay constant after each purchase. No sale or tax benefit is included in comparison totals.
Save your analysis
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Time to save the larger down payment, closing costs and $5,000 reserve
2 years 1 months
Savings $99,074 · cash needed $97,975 · estimated home price $422,615
Calculated monthly. This is cash readiness, not mortgage approval or payment affordability.
| Time | Home price | Your savings | Cash needed | Still needed |
|---|---|---|---|---|
| Today | $397,375 | $50,000 | $92,423 | $42,423 |
| Year 1 | $409,296 | $74,000 | $95,045 | $21,045 |
| Year 2 | $421,575 | $97,208 | $97,747 | $539 |
| 2 years 1 months | $422,615 | $99,074 | $97,975 | $0 |
| Year 3 | $434,222 | $119,600 | $100,529 | $0 |
| Year 4 | $447,249 | $141,152 | $103,395 | $0 |
| Year 5 | $460,667 | $161,839 | $106,347 | $0 |
The cash target moves with the home price. It includes the down payment, closing costs and reserve. Savings remain unspent here. A target not reached within 50 years shows the first 10 years.
Waiting buyer purchases after 2 years 1 months and has owned the home for 0 months at this comparison date.
PITI + PMI difference: $398/month more if you buy now.
During the wait, the buy-now home changes in value by $25,240 and its mortgage is paid down by $8,302. These amounts are already included in equity.
Buy-now difference: $12,473 before any selling costs. No sale is assumed.
Positive favors buying now; negative favors waiting. The waiting buyer purchases when the cash target is first reached. The selected year includes their subsequent mortgage paydown, home value change, maintenance and remaining cash. Equity includes the down payment, appreciation and principal paydown; it is not cash in hand. Payments and buyer cash include PITI plus PMI; Home Maintenance also reduces homeowner cash separately each month. Other ownership expenses are excluded, so this is a mortgage comparison rather than a complete household budget.
| Year | Home value (estimated) | Home value change | Mortgage paid down | Mortgage balance | Buyer cash | Home equity | Total cash + equity | LTV (estimated value) | PMI / month |
|---|---|---|---|---|---|---|---|---|---|
| 0 | $397,375 | $0 | $0 | $377,506 | $22,184 | $19,869 | $42,053 | 95.0% | $157 |
| 1 | $409,296 | $11,921 | $3,835 | $373,672 | $35,384 | $35,625 | $71,009 | 91.3% | $157 |
| 2 | $421,575 | $24,200 | $7,947 | $369,560 | $48,584 | $52,016 | $100,599 | 87.7% | $157 |
| 2.08 | $422,615 | $25,240 | $8,302 | $369,204 | $49,684 | $53,411 | $103,095 | 87.4% | $157 |
| 3 | $434,222 | $36,847 | $12,356 | $365,150 | $61,784 | $69,072 | $130,856 | 84.1% | $157 |
| 4 | $447,249 | $49,874 | $17,084 | $360,422 | $74,984 | $86,827 | $161,811 | 80.6% | $157 |
| 5 | $460,667 | $63,292 | $22,154 | $355,353 | $89,757 | $105,314 | $195,071 | 77.1% | $0 |
Value change and paydown are already included in equity, not added again. This LTV uses the estimated value each year. The projection assumes approved PMI cancellation below 80% estimated LTV; actual cancellation requires servicer review.
The principal portion of each mortgage payment reduces your debt and builds equity. Interest, taxes and insurance do not build equity.
If the home increases in value, you benefit while you own it. Waiting can mean paying more for the same home. Values can also fall.
A fixed-rate loan keeps principal and interest steady while rent may rise. Property taxes and insurance can still increase.
Make the space your own and plan for the long term, subject to local rules and any community restrictions.
Qualified mortgage interest may reduce taxable income if you itemize. A deduction reduces income subject to tax; it is not a dollar-for-dollar refund.
Use annual taxable income after deductions, not gross salary. Each federal rate applies only to income within that bracket.
| Federal taxable income | Federal marginal rate | Federal + Utah 4.45% (simple sum) |
|---|---|---|
| Up to $12,400 | 10% | 14.45% |
| Over $12,400 through $50,400 | 12% | 16.45% |
| Over $50,400 through $105,700 | 22% | 26.45% |
| Over $105,700 through $201,775 | 24% | 28.45% |
| Over $201,775 through $256,225 | 32% | 36.45% |
| Over $256,225 through $640,600 | 35% | 39.45% |
| Over $640,600 | 37% | 41.45% |
Utah has a flat 4.45% income-tax rate for 2026, before credits. The combined column is a simple reference; federal and Utah taxable income differ, and it does not calculate effective taxes or mortgage-interest savings. Selecting a filing status does not change your savings-rate entry below.
IRS 2026 tax rate schedulesUtah may provide an additional benefit through its taxpayer tax credit. The credit starts with 6% of eligible standard or itemized deductions, with adjustments and an income phase-out. Mortgage interest may increase that credit when you itemize, but the extra Utah benefit may be $0. It is not simply interest × 4.45%.
Starts at 22% for a federal-only example. Enter your own rate, including any confirmed additional Utah benefit. No Utah credit is assumed or calculated automatically.
Buy-now mortgage interest in Year 1
$26,304
Illustrative Year 1 tax savings if all interest adds to your deduction
$5,787
Illustration = Year 1 interest × your estimated deduction-benefit rate. This assumes all that interest is eligible and increases your deductions beyond what you would otherwise claim. If you take the standard deduction, the additional savings may be $0. Filing status, loan limits, other deductions and tax brackets can reduce the benefit. These savings are not included in cash, equity or the buy-now comparison totals.
Confirm eligibility with your tax professional. IRS mortgage-interest deduction rules · Utah 2026 income-tax rate · Utah taxpayer tax credit explanation
Buying also uses cash for closing costs and brings repair and maintenance responsibilities. Renting preserves flexibility. The best choice depends on your budget, cash cushion and how long you plan to stay.
How mortgage payments build equity · Costs to consider before buying
Your cash and comfortable monthly housing payment determine the starting home-price budget. The estimate subtracts mortgage mortgage insurance, property taxes and homeowners insurance from your monthly payment, calculates the loan it can support, and limits the price to what your cash can cover after closing costs and reserve. That calculated price feeds the comparison automatically. Income, debts, credit and loan-program rules still require lender review. See CFPB guidance on setting a home budget.
The cash target is the future home price times the later down-payment percentage, plus closing costs and your cash reserve. Savings receive what remains from a fixed housing-plus-saving budget after your entered rent. No interest on savings or income growth is assumed. Taxes and homeowners insurance are entered as annual percentages of purchase price, with monthly and annual dollar amounts shown. The later home’s starting estimates scale with its purchase price; both stay constant after each purchase. Home Maintenance defaults to $100 per month and reduces homeowner cash separately, without changing PITI, PMI or the estimated home-price budget. Renters do not pay this homeowner expense. Utilities and other ownership expenses are excluded. Closing costs default to 2% for both purchases and the cash reserve defaults to $5,000. The calculator checks the target each month. Buying now spends its down payment and closing costs immediately; later monthly costs reduce the buyer’s remaining cash.
Both paths begin with the same savings and budget. At the cash-ready date, the waiting buyer purchases once: cash is reduced by the down payment and closing costs, and the down payment becomes equity. Before the purchase is funded, the waiting buyer retains savings and has no home equity. Later comparison years include that buyer’s mortgage paydown, home value changes, maintenance and cash remaining. Equity = estimated home value minus mortgage debt. Appreciation and paydown are already included, not added twice. No sale or selling costs are assumed. Negative differences favor waiting; cash shortfalls prevent a funded comparison.
For example, on a $500,000 home, 5% down is $25,000 and 20% is $100,000 before closing costs and reserves. At 3% price growth, a year later the assumed price is $515,000 and the 20% down payment becomes $103,000. This is a hypothetical growth assumption, not a forecast. Falling prices or high mortgage payments can favor waiting.
The default $0 later mortgage insurance represents the conventional 20%-down example, not every loan program. Below 20%, the annual PMI rate defaults to 0.5% of each original loan amount, with monthly and annual dollar estimates shown. Review it with your lender. This projection assumes approved PMI cancellation when the balance falls below 80% of estimated current value. This is a planning assumption, not an eligibility guarantee. Actual requests may require minimum loan age, lower LTV or a valuation. Scheduled original-value automatic termination remains a fallback. FHA follows different rules. Cash readiness does not establish qualification or affordability. Tax benefits, sale taxes, investment taxes and refinancing are excluded. Rental income is excluded; use the House Hack Calculator for ADU or basement rent.
Review mortgage-insurance terms with your lender and CFPB mortgage-insurance guidance. See also Fannie Mae current-value cancellation requirements. Utah buyers should obtain property-specific tax and insurance estimates and review the purchase budget with their lender.
Author: Todd McClean, Realtor® | Real Estate Investment Strategist, CENTURY 21 Everest Realty Group. Reviewed November 1, 2026. This tool provides general real estate information and is not legal, tax, accounting, lending, securities, commodities, or financial-planning advice.