To calculate a real estate down payment, determine the loan type and required percentage. For conventional loans, a 20% down payment is standard, while FHA loans typically require 3.5% (for credit scores above 580). The formula is:

Down Payment = Purchase Price × Down Payment Percentage

Example: A $300,000 home with a 20% down payment requires $60,000. If using an FHA loan, the down payment would be $10,500.

The down payment percentage impacts loan approval, interest rates, and long-term costs. Lenders mandate down payments to reduce default risk, as buyers with larger investments are less likely to abandon properties. Data from the Federal Housing Finance Agency (FHFA) shows that loans with 20% down payments have a 1.5% annual default rate, compared to 4.2% for loans with less than 10% down. Additionally, private mortgage insurance (PMI) costs ~0.5–1.5% of the loan amount annually for conventional loans below 20%, adding to expenses. A 2021 Urban Institute study found that 40% of first-time buyers face challenges meeting down payment requirements, highlighting its role in housing affordability. Lower down payments increase monthly payments and interest burdens, as seen in FHA loans, which average $1,300 in annual PMI fees for a $250,000 home. Thus, understanding down payment calculations is critical for financial planning and loan eligibility.