Costs
Down Payment
The upfront cash payment you make toward the purchase of a home, expressed as a percentage of the price. A 20% down payment on a $400,000 home is $80,000. Putting 20% down avoids private mortgage insurance, but many loan programs allow much less — FHA loans require just 3.5%, and conventional loans can go as low as 3%. Your down payment directly affects your loan amount, monthly payment, and equity.
Why It Matters
Knowing about Down Payment helps you budget accurately for your home purchase. Many first-time buyers are surprised by costs beyond the purchase price, and understanding each component prevents unwelcome surprises at the closing table.
When planning your homebuying budget, factor in down payment early in the process. Ask your lender or real estate agent for estimates specific to your situation and location, since these costs can vary significantly.