Definition
An upfront payment you make when buying something expensive, like a house or car. It reduces the amount you need to borrow.
What to consider
- Start saving early to build a solid down payment.
- A larger down payment can lower your monthly mortgage costs.
- It can also help you secure a better loan rate.
Real world scenarios
- After months of saving, Lydia finally accumulates 20% for her first home’s down payment, reducing mortgage insurance requirements.
- To get better auto loan terms, Marcos offers a higher down payment. This step trims his monthly bill and lowers interest costs.
- Kelly budgets carefully, setting aside a portion of each paycheck into a “down payment” fund for her future condo purchase.
Related terms
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