Down payment.
In plain English
A down payment is the portion of a purchase price you pay in cash upfront rather than borrowing. The lender finances the rest. A larger down payment means you borrow less, so your monthly payment is smaller and you pay less interest over the life of the loan. On a home, putting down 20 percent or more typically lets you skip private mortgage insurance, an added monthly cost that protects the lender, not you.
01Why it matters
The size of your down payment changes how much the whole purchase costs you, not just the day-one bill. More down means a smaller loan, lower monthly payments, and less total interest. It can also qualify you for better loan terms. The tradeoff is that a bigger down payment ties up cash you might want for an emergency fund or other goals.
02The math, step by step
On a $300,000 home, a 20 percent down payment is $60,000, leaving a $240,000 loan. A 10 percent down payment is $30,000, leaving a $270,000 loan plus private mortgage insurance until you build enough equity. The smaller down payment is easier today but costs more every month and adds insurance you would otherwise avoid.
03What this is NOT
The down payment goes toward the price of the home and becomes your equity. Closing costs are separate fees for processing the loan, such as appraisal, title, and origination charges. You need cash for both, and lumping them together can leave a buyer short at the closing table.
04Receipts
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