Down Payment
Quick Summary
The cash you pay upfront when buying a property, reducing the mortgage needed.
ELI5 Explanation
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It’s the part of the home price you pay yourself, not with a loan.
Detailed Explanation
Your down payment affects your loan-to-value (LTV), your need for mortgage default insurance, and often your interest rate. Lenders also care about the source of funds and may require documentation showing the money is yours and has been in your account long enough.
Example
On a $800,000 purchase, a 10% down payment is $80,000 and the mortgage is $720,000 (before insurance and closing adjustments).
Why It Matters
A larger down payment can improve approval odds and reduce ongoing borrowing costs.