Home Buying

What Is a Down Payment?

A down payment is the portion of a purchase price paid upfront in cash, with the rest financed by a loan. For a home, it is usually expressed as a percentage of the price. A larger down payment means a smaller loan, lower monthly payments, and less total interest.

How It Affects the Loan

Down payment ÷ purchase price = down payment percentage. On a 300,000 home, a 20% down payment is 60,000, leaving a 240,000 loan.

The 20% Reference Point

On many conventional US mortgages, a down payment below 20% typically means paying private mortgage insurance (PMI). Minimum down payments vary by loan program and country.

Down Payment vs. Closing Costs

Closing costs are separate from the down payment, so the total cash needed at purchase is the sum of both.

🧮 Calculate It Yourself

Put Down Payment into practice with these free calculators — no sign-up, nothing stored.

🏦 Down Payment Savings Calculator Find how much to save monthly to hit your home down payment goal. Calculate → 🏡 Home Affordability Calculator Find the home price range you can realistically afford. Calculate → 🏡 Closing Costs Calculator Estimate the one-time costs due when you close on a home purchase. Calculate →

🔗 Related Terms

Mortgage Private Mortgage Insurance (PMI) Loan-to-Value Ratio (LTV) Closing Costs

More Home Buying Terms

📖 Browse all glossary terms or explore all free calculators.

Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.