 TITLE: What Is a Mortgage and How Does It Work? CONTENT: How Much Should I Save for a Down Payment?\n------------------------------------------\nYour down payment directly reduces the amount you owe on your mortgage loan. Many mortgage lenders will require a down payment of between 3% to 5%, but 20% or more is ideal.  \nThe more money you put down for a mortgage down payment, the lower the loan amount you'll need and the less interest you'll pay over the life of the loan.\nFor example, if you buy a house for $200,000 on a 30-year loan with a 5% interest:\n*   A down payment of 3% means that you pay $6,000 and then borrow $194,000.\n    *   Monthly Payments = $1,041.43\n    *   Total Principal Paid = $194,000\n    *   Total Interest Paid = $180,916.22\n    *   Total Cost of Loan = $374,916.22\n*   A down payment of 20% means that you pay the bank $40,000 and borrow $160,000.\n    *   Monthly Payments = $858.91\n    *   Total Principal Paid = $160,000\n    *   Total Interest Paid = $149,209.25\n    *   Total Cost of Loan = $309,209.25\n    *   Savings = $66,706 END