Definition
The upfront portion of the home's purchase price paid in cash by the buyer. Conventional loans require as little as 3% down, FHA loans 3.5%, while VA and USDA loans offer 0% down options. Putting 20% or more down eliminates the need for private mortgage insurance (PMI), reducing monthly costs significantly.
Related Mortgage Terms
- Earnest Money
A good-faith deposit made by the buyer when submitting an offer on a home, typic...
- Loan-to-Value Ratio (LTV)
The ratio of the mortgage amount to the appraised property value, expressed as a...
- Private Mortgage Insurance (PMI)
Insurance required by conventional lenders when the down payment is less than 20...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.