Definition
Your down payment is what you contribute upfront toward the purchase price. The remainder is financed through mortgage. Larger down payments reduce loan amounts, lower payments, may eliminate mortgage insurance, and often secure better rates.
Where you’ll meet it
Am I ready? Money, credit, and what it really costs
See it in Buying my first home · Step 1About this term
Down payment is typically 3-20% of the purchase price and is paid at closing. A larger down payment means a smaller loan and better loan terms. Lenders often offer better interest rates for down payments of 15-20% or higher.
Pro Tip
While 20% down avoids PMI, many first-time buyers qualify with 3-10% down; don't delay homeownership if you can't save 20%.
Example
On a $300,000 home, a 20% down payment is $60,000; a 10% down payment is $30,000; a 3% down payment is $9,000.