 TITLE: How Do Down Payments Work? CONTENT: Down payment requirements vary from lender to lender and from loan type to loan type. They are usually expressed as percentages of the purchase price—15%, 20% or 25% for example—and must be paid at the time of purchase.\nFor example, the mortgage on a $200,000 house with a 20% down payment of $40,000 would result in financing of 80% of the purchase price—$160,000.\nBecause lenders consider down payments marks of borrowers' good faith and hedges against non-payment risk, down payment requirements may vary according to loan applicants' credit profiles. Lenders may require higher down payments from borrowers with lower credit scores, which can indicate short credit histories, past instances of late or missed payments, or even more severe negative credit events such as loan defaults, foreclosures or bankruptcies.\nWhen you apply for a loan that requires a down payment, the amount of the required down payment will be stated, along with the interest rate and any applicable fees, in the loan offer. Like other loan terms, the down payment amount is negotiable; you may get the lender to agree to a lower down payment in exchange for a higher interest rate. (This boosts your overall borrowing costs two ways—by increasing the amount you're borrowing, and the interest you're paying on the borrowed sum.) Conversely, you can often negotiate lower interest rates or fees in exchange for making a larger down payment—a practice also called \"buying down the points.\"\nMortgage lenders typically require down payments to be made in the form of a certified check. Auto financiers may require certified checks as well, but some accept electronic transfers, debit card payments or personal checks. Retailers of appliances, furniture and other large goods may accept down payments by any of these methods or in the form of credit card payments. END