The part of the purchase price you pay in cash rather than borrow. A larger down payment lowers the loan amount and can remove the need for mortgage insurance on a conventional loan.
Also called: down, money down
The loan amount divided by the property's value or price, whichever is lower, as a percentage. Lower LTV means less risk for the lender and often better pricing; above 80% usually triggers mortgage insurance on conventional loans.
Insurance that protects the lender on a conventional loan when the down payment is under 20%. The borrower pays for it, usually monthly. It can be removed once equity reaches set levels, and ends automatically at 78% of the original value.
Money given by a relative or other allowed donor toward a down payment or closing costs, with no expectation of repayment. Lenders require a signed gift letter and proof of the transfer.
Programs, often run by state or local housing agencies, that help buyers cover the down payment or closing costs through grants or low-cost or forgivable second loans. Most have income, price or first-time buyer rules.
A deposit the buyer puts down after the offer is accepted to show they are serious. It is held in escrow or a trust account and usually goes toward the down payment or closing costs at closing.
The total amount the buyer must bring to closing, usually the down payment plus closing costs minus earnest money and any credits. The final figure is on the Closing Disclosure.