10% vs 20% down on a $400,000 house
Same 6.5% rate, same 30-year term. The smaller loan cuts principal and interest. PMI and tax are still outside the formula.
Down payment changes the loan size. It does not, by itself, change the rate or the term. On a $400,000 purchase, 10% down means you borrow $360,000. 20% down means you borrow $320,000. This page prices both at 6.5% for 30 years, principal and interest only. The mortgage calculator will match. Escrow, PMI, and closing costs will not, because they are not in the formula.
The two notes
Borrow $360,000. Monthly principal and interest $2,275.44. Total of 360 payments $819,158.40. Interest if you never refinance and never send extra principal: $459,158.40. Borrow $320,000 at the same rate and term. Monthly $2,022.62. Total paid $728,143.20. Interest $408,143.20.
The extra $40,000 down cuts the monthly draft by $252.82 and cuts lifetime interest by $51,015.20. You handed the seller $40,000 more at closing so the bank would finance less. The interest savings are the return on that choice inside this formula. They are not cash in your pocket on day one. The $252.82 is the cash-flow change every month after that.
PMI is the part this page refuses to invent
Many conventional loans add private mortgage insurance when the down payment is under 20%. FHA uses its own mortgage insurance. Those premiums can eat some or all of a payment gap, and they are not in $2,275.44 or $2,022.62. A 10% down loan can draft more than a 20% down loan by more than $252.82 once PMI is on the bill. It can also drop later when PMI falls off. We do not model the drop. If you are comparing the two in real life, get the insurance quote before you treat $252.82 as the whole story.
Property tax and homeowners insurance are also outside both notes. They depend on the house and the county, not on whether you borrowed $360,000 or $320,000, except that a larger loan does not change the tax assessment. Add one-twelfth of those bills to whichever P&I you pick. That sum is closer to the draft. The Loan Estimate is closer still.
Cash you still need
The 20% path needs $80,000 plus closing costs, not $80,000 instead of closing costs. The 10% path needs $40,000 plus closing costs plus, often, a higher monthly bill. Emptying a reserve to hit 20% can make the smaller note and a brittle budget. The calculator will not warn you. It will print $2,022.62 either way.
Closing costs still have to be paid on both paths. Rolling them into the loan makes the principal larger than $360,000 or $320,000. Type the amount you will actually borrow, not the purchase price minus a round down-payment percent, if the lender financed costs. Otherwise the $252.82 gap is a clean compare that your Loan Estimate will not match.
Rate and term are separate levers. A half-point cut on a fixed loan size is the other guide on this site. Do not mix “I put 20% down” with “I got a cheaper rate” and attribute the whole monthly drop to the down payment. Here the rate stays 6.5% and the term stays 30 years.
Enter 360000, 6.5, 30 years on the mortgage calculator, then 320000. Match $2,275.44 and $2,022.62. We are not a lender and there is no application. The closing disclosure wins.
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