Down Payment
Cash you put toward the home purchase, expressed as a percentage of price. The rest is financed via mortgage.
Down payment is the cash portion of a home purchase. Lower minimums: 3% conventional (HomeReady, Home Possible), 3.5% FHA, 0% VA, 0% USDA. Higher down payment means lower LTV, lower rate, no PMI requirement (at 20%+), and stronger offer position in competitive markets. Source of down payment must be verified — gift funds, savings, retirement accounts, sale proceeds, and DPA programs are typical.
Related terms
LTV (Loan-to-Value)
Loan amount divided by property value, expressed as a percentage. Lower LTV usually means lower rate and easier qualification.
PMI (Private Mortgage Insurance)
Insurance the borrower pays on conventional loans with less than 20% down, protecting the lender against default loss.
Closing Costs
Fees and charges paid at closing in addition to the down payment. Typically 2-5% of loan amount.
DPA (Down Payment Assistance)
Programs that provide grants, forgivable loans, or deferred-payment seconds to help with down payment and closing costs.
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