Definition

The down payment is the portion of a home's price you pay upfront. A larger down payment means a smaller loan, lower monthly payments, and can avoid PMI at 20% or more, while some loan programs allow far less down. Balancing the down payment against keeping cash reserves is a key part of buying readiness.

1. Private Mortgage Insurance (PMI)

   Insurance lenders require when your down payment is under 20%, protecting them if you default.
2. Loan-to-Value Ratio (LTV)

   The size of your loan compared with the value of the property.
3. Closing Costs

   The fees paid to finalize a home purchase or refinance, on top of the down payment.