Down payment
The cash the buyer pays upfront toward the purchase price. The rest is the loan. Down payment size affects which loan programs are available and whether mortgage insurance is required.
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See how it worksWhere this comes up in a sale, and what follows
- Host showings and open houses (comes before)
Part 1 of 4
Why a seller cares
The size of the buyer's down payment tells you how much room their loan has. A big one absorbs a low appraisal; a small one means every dollar of gap has to come from somewhere else.
Part 2 of 4
A simple example
Two buyers at $300,000. One puts 20% down, the other 5%. The home appraises at $290,000.
| The buyer | What the $10,000 gap does |
|---|---|
| 20% down, $60,000 in cash | They can often absorb it and keep the price |
| 5% down, $15,000 in cash | They probably cannot; a price cut or a walk is likely |
| Cash buyer | No appraisal from a lender; the gap is only theirs to care about |
A large down payment is a cushion under the price. A small one puts the appraisal in charge.
Part 3 of 4
What people get wrong
That a bigger down payment means a richer buyer and therefore a higher offer. It means a sturdier offer at whatever price it is.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines down payment in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.