Calculating our Down Payment

Thanks to an ice storm in San Antonio this week, Andy and I had some extra time at home to sit down and do some calculations for a down payment. The calculations were simple, and it provided us with a real number, a real goal for our savings sprint.

Why 20% Down?

As I mentioned in this post, Andy and I have decided that we would like to put 20% down on a house.  Our main motivation has been to avoid having to pay private mortgage insurance (PMI) once we buy a home. But I was pleased to read about three other reasons for a 20% downpayment in Egypt Sherrod’s book, Keep Calm, It’s Just Realestate. Sherrod is a real-estate agent who has been in the business for over fourteen years, and she is the host of HGTV’s Property Virgins. Here are the other reasons that Sherrod lists for putting 20% down on a home:

  1. Buyers with a larger down payment are viewed as less of a borrowing risk for lenders, which can then result in a lender offering a lower interest rate. This is very important in our situation with a zero credit score, because lenders will look for indications other than a credit score to determine our borrowing risk.

2. A larger downpayment requires buyers to borrow less money which then equals a lower monthly payment.

3. Putting 20% down automatically gives us more equity in our home. More equity could make it easier to refinance later, should we want to do so.

Doing the Math

So, we confirmed that our goal is to save enough money for a 20% downpayment. Now we needed to calculate how much money that 20% would actually require. To do so, we used this handy worksheet from Dave Ramsey’s website.

After about ten minutes and some simple math, we had our downpayment savings goal.

“Whoa, that’s a lot of money,” I murmured. My head bent over the worksheet on the desk while my detail-challenged brain tried to absorb the naked reality of the five-digit number. The space heater rattled, filling the silence between us as we both stared at the number.

“Yah, it is,” Andy replied. He stretched his long, lanky arms and shook out the chill in the air. “We will probably get some wind falls in the next couple of months- tax refund, cashed out vacation time. Plus, we’ll see what my first pay check at the new job looks like.” I breathed in. Even with those extra money sources, I don’t know how we could get to the number on the page. I sighed, folded the worksheet and slid it into my prayer journal.

So, our sprint to our 20% downpayment now looks like a marathon. The 400 meters has become 26.2 miles. It’s time to lace up the running shoes, buckle down our budget and chase after our audacious savings goal.


The worksheet above came from a series of emails about buying a home that I signed up to receive from Dave Ramsey’s team. Click here to sign up for the five-day email series that is chockfull of tips to save for a down payment.

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Andy and Ginny

We are a married couple living in San Antonio, Texas who are delving into the adventure of buying a house with a zero credit score and trying to help other people do the same.

3 thoughts on “Calculating our Down Payment”

  1. All good points on the down payment. It is good to have an exact goal in mind – just like paying off debt, having a concrete savings goal can keep you motivated when you can see the number and chart your way there!

    I am reading “How to save thousands on your home mortgage” right now. I will be sure to let you know if I find out any secret truth to actually saving thousands on said mortgage….

    1. Yes, please let me know what you find out on how to save thousands on a mortgage. I have to admit, all the talk about rising interest rates is making a little antsy.

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