The upfront cash the buyer pays toward the purchase price — the difference between the sale price and the loan amount.
Full Definition
The down payment is the portion of the home's purchase price the buyer pays out of pocket. It's expressed as a percentage — a 20% down payment on a $500,000 home is $100,000. Minimum down payment requirements vary by loan type: conventional loans allow as little as 3%, FHA requires 3.5% (580+ score), VA and USDA offer 0% down. A larger down payment reduces your loan amount, lowers your monthly payment, eliminates or reduces mortgage insurance, and often results in a better interest rate. Down payment funds can come from savings, retirement accounts (with potential penalties), gift funds from family members, and eligible assistance programs.
Related Terms
Whether you're buying a home or building a mortgage career, Lend Loft has the tools, training, and licensed support to get you there.