Down Payment

The upfront cash a buyer puts toward a purchase, with the rest financed by a loan.

A down payment is paid at purchase, reducing how much needs to be borrowed. On a mortgage, a bigger down payment means a smaller loan, lower monthly payments, less interest paid over the loan's life, and — above a certain threshold — no mortgage insurance requirement.

Worked Example

On a $400,000 home, a 20% down payment is $80,000, financing $320,000. A 5% down payment is $20,000, financing $380,000 — a smaller upfront cost, but a larger loan, higher payments, and likely mortgage insurance.

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