Finanzen · Glossar
What is Down Payment?
Schnelldefinition
The upfront cash portion of a purchase, paid at closing. The remainder is financed through a loan or mortgage.
Vollständige Erklärung
A down payment is the portion of a large purchase paid in cash upfront, with the balance financed. For homes, 20% is the traditional benchmark — below that, most lenders require PMI. For cars, 10–20% is standard. The size of the down payment affects: (1) the loan amount, (2) the monthly payment, (3) the interest paid over the loan life, (4) whether PMI is required, and (5) the interest rate offered (larger down payments often get better rates). A larger down payment also reduces the lender's risk, so the loan is more likely to be approved. There are also opportunity costs — cash used for a down payment cannot be invested elsewhere.
Verwandte Rechner
Calculators that use or explain Down Payment.
Verwandte Begriffe
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Last reviewed: June 15, 2026 • Category: Finanzen