What is Down Payment?
The upfront portion of a purchase you pay yourself, with the rest financed by a loan.
The down payment reduces the loan amount, your EMI, and total interest, and often improves your rate. Lenders set a minimum (e.g. 10–20%); transaction costs are usually extra.
Example
20% down on a 5,000,000 home is 1,000,000.
Why the down payment matters
The down payment is the part of a purchase you pay upfront from your own funds; the lender finances the rest. A larger down payment reduces the loan amount, which lowers your monthly payment, your total interest, and your loan-to-value ratio — often earning you a better rate and avoiding mortgage insurance.
Typical minimums
Minimum down payments vary by country and product: many home loans expect roughly 10–25%, while car loans and some first-home schemes allow less. Regulators sometimes set a floor. Putting down more than the minimum, if you can, is usually the cheapest way to reduce the lifetime cost of the loan.