Down Payment: The portion of a home’s purchase price paid upfront in cash, separate from the amount financed through a mortgage loan.
Buyers encounter the down payment as one of the largest single costs at the start of the homeownership journey. The amount required varies depending on the loan type, lender requirements, and the buyer’s financial profile. Conventional loans commonly cite a 20% down payment as a benchmark, though many programs allow significantly lower amounts, sometimes as low as 3% to 3.5% for qualifying buyers. Putting down less than 20% often triggers a requirement for private mortgage insurance (PMI), which adds to monthly costs. The down payment is typically due at closing and must usually come from documented, acceptable sources such as savings, gifts from family members, or approved assistance programs. Because this figure directly affects your loan amount, it also influences your monthly mortgage payment and total interest paid over time.
Watch for: Down payment assistance programs offered by state and local agencies may be available in your area. These programs vary widely in eligibility requirements and benefit amounts. All percentages and program details mentioned here are general in nature and may not apply to your specific situation. HomeRule does not provide lending, financial, or real estate advice. Always confirm current requirements with a licensed lender.
Example: On a $350,000 home, a 10% down payment would be $35,000, leaving a mortgage loan amount of $315,000 before any fees or closing costs.
See also: Closing Costs, Private Mortgage Insurance (PMI), Loan-to-Value Ratio