Down Payment
Initial upfront payment when purchasing property; typically 5-20% of purchase price in US & Canada.
Key Takeaways
- First, understand the key concepts and how things work
- Confirm the latest regulations and requirements from official sources
- Talk to qualified experts for personalized guidance
Overview
A down payment is the initial upfront payment made when purchasing a property. It represents the buyer's equity in the property and reduces the amount of the mortgage loan needed. The down payment amount affects interest rates, PMI requirements, and overall monthly mortgage payments.
Typical Down Payment Requirements
- Conventional loans: 3-20% down
- FHA loans (US): 3.5% down
- VA loans (US): 0% down for eligible veterans
- Canada CMHC: 5-20% down based on purchase price
Down Payment Impact
- Lower down payment = higher monthly payment
- Less than 20% down usually requires PMI (US) or default insurance (Canada)
- Higher down payment may qualify for better interest rates
- 20%+ down typically eliminates PMI requirement
Related Glossary Terms
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AllMoneyCalc - Mortgage CalculatorFrequently Asked Questions
Below we cover the core concepts and how they work in practice in real estate and finance.
No two scenarios are the same, so use this as a starting point. For personalized advice, consult a qualified professional.
For the most accurate details, visit IRS, CRA, HUD, and CFPB directly for the most accurate and up-to-date information.
This content is for informational and educational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for advice specific to your situation.