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If someone buys a home for $200,000 and makes a 20 percent down payment, that person will have to pay $40,000 up front.
What is Down payment?
- An advance, partial payment known as a down payment is made when buying expensive products or services like a home or a car.
- Typically, it is paid in cash or an equivalent at the time the transaction is completed. The remaining payment must then be financed through a loan of some kind.
- A greater down payment typically indicates that you are a less risky borrower, and a lower interest rate reflects a less hazardous borrower.
- A lower interest rate will enable you to pay less interest overall and save you money on your monthly payment.
Price of home = $200,000
Down payment = 20%
Upfront cost = $200,000 x 20%
= $40,000
Hence, that person will have to pay $40,000 up front.
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