Down Payment

A down payment is the upfront cash you pay toward a home's purchase price, with the rest covered by your mortgage.

It is usually expressed as a percentage of the price. For example, putting $60,000 down on a $300,000 home is a 20 percent down payment, leaving $240,000 to finance. A larger down payment lowers your loan amount, can earn you a better interest rate, and on conventional loans, reaching 20 percent lets you avoid private mortgage insurance.

Many loan programs allow much smaller down payments, sometimes as low as a few percent, though a smaller amount usually means higher monthly costs. Test different amounts with the main payment calculator.