Down Payment

A down payment is the initial payment you make when purchasing a large asset, such as a home, a car, or other significant item. It represents a portion of the total purchase price.

The down payment is typically expressed as a percentage of the purchase price. For example, a 20% down payment on a $500,000 home would be $100,000.

The amount of the down payment required can vary depending on the lender, the type of asset, and your creditworthiness.

A larger down payment can often result in a lower interest rate on the loan and may also reduce the amount of mortgage insurance you need to pay. It demonstrates your seriousness and your financial responsibility.

• Related Terms: Mortgage, Home Purchase, Real Estate, Loan, Financing