What is Down Payment?
A down payment is the portion of a home’s price the buyer pays up front in cash, with the rest covered by the mortgage. It is usually expressed as a percentage of the price. A larger down payment lowers the loan amount, can reduce or eliminate mortgage insurance, and may help secure a better rate.
Example: On a $500,000 home, a 20% down payment is $100,000, leaving a $400,000 mortgage and avoiding private mortgage insurance.