Whether you’re eyeing your dream home or the latest car, the term “down payment” often pops up, shrouded in mystery and financial jargon. In essence, a down payment is your upfront contribution to the purchase price of a big-ticket item. It demonstrates your commitment and reduces the total amount you need to borrow. Think of it as an investment in the item itself and your financial future.
Where Do Down Payments Show Up?
The following are the most common in major purchases:
· Real estate: Down payments on houses typically range from 3% to 20% of the purchase price, though some programs allow for 0% down.