Down Payment
The upfront cash you pay when purchasing a home or car, reducing the loan amount.
The traditional down payment for a home is 20% of the purchase price, which avoids Private Mortgage Insurance (PMI). However, many programs allow 3-5% down (conventional), 3.5% (FHA), or 0% (VA, USDA). A lower down payment means a higher loan amount, higher monthly payment, and PMI until you reach 20% equity. The trade-off is buying sooner versus buying cheaper.
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