What Is Down Payment?
The down payment is the portion of the home's purchase price you pay upfront in cash. The rest is covered by your mortgage loan. The size of your down payment affects your loan amount, monthly payment, interest rate, and whether you'll need mortgage insurance.
Key Facts
- You don't need 20% down — many loans allow 3% to 5% (or even 0% for VA/USDA).
- Putting 20% down avoids PMI on conventional loans, saving $100-$400+/month.
- Down payment assistance programs (like CalHFA) can help first-time buyers.
- Gift funds from family are allowed for most loan types.
- A larger down payment means a lower monthly payment and less interest over time.
Real-World Example
Home price: $650,000. With 5% down ($32,500), you borrow $617,500 and pay PMI. With 20% down ($130,000), you borrow $520,000, skip PMI, and save about $350/month.
Why It Matters
Your down payment is the biggest upfront cost of buying a home and directly impacts your monthly affordability. Understanding your options — including low down payment programs — can open doors you didn't know existed.
En Español
El enganche es la porción del precio de compra de la casa que pagas por adelantado en efectivo. El resto lo cubre tu préstamo hipotecario. El tamaño de tu enganche afecta el monto de tu préstamo, pago mensual, tasa de interés y si necesitarás seguro hipotecario.