Question 1

What is a down payment?

Accepted Answer

A down payment is the initial upfront portion of the total home price paid at purchase. It represents your investment in the property and reduces the amount you need to borrow.

Question 2

What is a typical down payment percentage?

Accepted Answer

Common down payment percentages range between 5% to 20%, but it varies by lender, loan type, and location. Some government-backed loans may allow as little as 3% down.

Question 3

Does this calculator include closing costs?

Accepted Answer

No, this calculator focuses specifically on the down payment amount. Closing costs are separate expenses that typically range from 2% to 5% of the home price and should be budgeted additionally.

Question 4

How does the down payment affect my mortgage?

Accepted Answer

A larger down payment reduces your loan amount, which can lead to lower monthly payments, potentially better interest rates, and avoidance of private mortgage insurance (PMI) which is typically required for down payments less than 20%.

Question 5

Can I use gift money for a down payment?

Accepted Answer

Yes, many loan programs allow gift funds from family members to be used for down payments, though documentation will be required to prove the funds are indeed a gift and not a loan.

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