Down Payment
The upfront cash amount paid at the time of purchasing a home or vehicle, representing the portion of the purchase price not financed by a loan. A larger down payment reduces your loan amount and may help you avoid private mortgage insurance (PMI) on conventional loans.
Related guides
- Full credit & FICO® glossary
Browse all defined terms by category.
- Mortgage
A loan used to purchase or refinance real estate, where the property serves as collateral. Mortgages are installment loans with terms typically ranging from 10 to 30 years. Missing mortgage payments can lead to foreclosure. Minimum credit scores vary by loan type (FHA: 500, conventional: 620).
- Private Mortgage Insurance (PMI)
Insurance that protects the lender (not you) if you default on a conventional mortgage with less than 20% down. PMI adds to your monthly payment and can be removed once you reach 20% equity. FHA loans have their own version called mortgage insurance premiums (MIP).
Frequently Asked Questions About Down Payment
What does Down Payment mean?
The upfront cash amount paid at the time of purchasing a home or vehicle, representing the portion of the purchase price not financed by a loan. A larger down payment reduces your loan amount and may help you avoid private mortgage insurance (PMI) on conventional loans.
Is Down Payment important for my FICO® score?
Understanding Down Payment helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.