Mortgage Glossary
Down Payment
The upfront cash you pay toward the purchase price. The rest is covered by your mortgage loan.
What It Means
A down payment is the portion of the home's purchase price you pay out of pocket at closing. Your mortgage covers the rest.
Down payment requirements vary by loan type:
- Conventional loans: as low as 3%
- FHA loans: as low as 3.5%
- VA loans: 0% (no down payment required for eligible veterans)
- USDA loans: 0% in eligible rural areas
A larger down payment means a smaller loan, lower monthly payments, and you may avoid Private Mortgage Insurance (PMI). Down Payment Assistance programs can also help cover this cost.
Real-World Example
"On a $350,000 home with a 5% down payment, you'd pay $17,500 at closing and finance the remaining $332,500."
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Definitions are for educational purposes only and do not constitute financial or legal advice.