A down payment is the amount, usually stated as a percentage, of the total cost of a property that you pay in cash as part of a real estate transaction.
The down payment is the difference between the selling price and the amount of money you borrow to buy the property. For example, you might make a 10% down payment of $20,000 to buy a home selling for $200,000 and take a $180,000 mortgage.
With a conventional mortgage, you're usually expected to make a down payment of 10% to 20%. But you may qualify for a mortgage that requires a smaller down payment, perhaps as little as 3%.
The upside of needing to put down less money is that you may be able to buy sooner. But the downside is that your mortgage payments will be larger and you'll pay more interest, increasing the cost of buying.
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- Department of Veterans Affairs (VA) mortgage, Federal Housing Administration (FHA), Federal Housing Administration Mortgage, Home Equity Loan, Mortgage, mortgage-backed securities, Origination fee, PITI, Private Mortgage Insurance (PMI), Reverse mortgage
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