What is a down payment?
The down payment is a percentage of the cost of the home that you must pay when you go to settlement. The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. That’s why many first-time homebuyers turn to HUD’s FHA for help. FHA loans require only 3% down – and sometimes less.
The down payment is a percentage of the cost of the home that you must pay when you go to settlement. The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. That’s why many first-time homebuyers turn to HUD’s FHA for help. FHA loans require only 3% down – and sometimes less.
A down payment is a portion of available money given at the outset of a loan to demonstrate commitment to the purchase. A down payment is often given in cash, though in some cases it may be attached to an alternate line of credit. A down payment is usually only used in sales which involve a large amount of money. Loans to purchase houses and land are the most common loans to require a down payment, though loans for cars, boats and other luxury goods purchased on credit may also ask for a portion of the total cost up front. The down payment system exists because a link has been shown between the amount of real investment a borrower has in their purchase, and their fidelity in continuing to make payments regularly until the full amount owed has been settled. A down payment acts as a sort of insurance for lenders, since borrowers know that if they default on their loan, they will lose not only the property they were purchasing, but also their down payment. The traditional down payment for
