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Glossary Finance

Down payment

A down payment is the part of a purchase price you pay upfront from your own money, with a loan covering the rest.

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In more detail

On a $300,000 home, a 20% down payment is $60,000 and a loan of $240,000. A larger down payment lowers the loan, the monthly payment and the Loan-to-value ratio (LTV), and may avoid mortgage insurance, but ties up cash you might need as a reserve. Minimum down payments vary by country and loan programme.

Try these tools

Down Payment Calculator

Use this down payment calculator to find your affordable home price from available cash.

Mortgage Calculator

The Mortgage Calculator helps estimate the monthly payment due along with other financial costs associated with mortgages.

See also

  • Glossary Loan-to-value ratio (LTV)
    The loan-to-value ratio (LTV) is the loan amount divided by the value of the asset securing it, a key measure of lender risk.
  • Glossary Equity
    Equity is the part of an asset you truly own: its current value minus what you still owe against it.
  • Glossary Escrow
    Escrow is an arrangement in which a neutral third party holds money or documents until the conditions of a transaction are met.
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