What Is a Down Payment?

In a mortgage, a down payment is the first portion of the purchase price of the property. It's usually paid by the borrower out of pocket immediately upon completing the sale. The rest of the purchase price is paid for through the mortgage, which the borrower repays to the lender in monthly installments.

A down payment demonstrates the borrower's commitment to go through with the mortgage contract. Failing to do so means losing the down payment.