Down Payment
Direct definition
The portion of a home's purchase price you pay in cash upfront, with the rest financed.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Down payment percentages vary by program — 0% for VA and USDA, 3% for many conventional first-time-buyer programs, 3.5% for FHA, higher for jumbo and investment loans.
Why it matters
A larger down payment reduces the loan, lowers your payment, may eliminate mortgage insurance, and can improve pricing.
Where you may see it
- Loan Estimate
- Purchase contract
- Closing Disclosure
A real-world example
Educational and illustrative only
A common misunderstanding
A down payment is not the same as closing costs — they're separate cash requirements, though both are due around the same time.
Frequently asked
Do I need 20% down?+
No. Many programs allow 0–5% down. 20% simply avoids PMI on conventional loans.
Can I use gift funds?+
Often yes — most programs allow properly sourced and documented gifts from eligible donors.
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- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026