Down payment

The portion of a home's purchase price the buyer pays upfront in cash, with the rest financed by the mortgage; it is expressed as a percentage of the price (for example, 20% down on a $300,000 home is $60,000). A larger down payment lowers the loan amount and can avoid private mortgage insurance, while some loan programs allow much less. When part of the down payment comes from a gift, the lender requires a signed gift letter and a documented money trail to confirm the funds are a true gift and not a hidden loan that would change the borrower's debt picture.