Anonymous
Anonymous asked in Business & FinanceRenting & Real Estate · 8 months ago

Why is it so valuable to make a down payment on a house?

13 Answers

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  • 8 months ago

    Lowers the monthly payment, and most loans require some kind of down payment.

  • 8 months ago

    you have something to lose if you do not make your payments.

  • 8 months ago

    Basically your lender wants to know they will get their money back if you can't or won't make payments.. So if you borrow say £80k towards a house that costs £100k, then there is some leeway for them, even property prices fall.

    Years back lenders would lend 100% on the purchase price - not these days though - that said 100% mortgages did attract a much high interest rate

  • Judy
    Lv 7
    8 months ago

    Uh, otherwise you won't get a loan unless you qualify for a program like a VA loan. A lender wants to see that the buyer has some skin in the game.

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  • Stoo
    Lv 7
    8 months ago

    The more money you put up front, the better.  The best mortgage is the one you don't have.  The bigger the down payment the less you borrow.  And smaller down payments basically mean you can't handle unexpected circumstances.  You can borrrow on the equity in your house, but that only comes from owning part of it outright.  That's what the down payment is. 

  • Anonymous
    8 months ago

    Making a down payment on a house, or buying one is NOT valuable. Living, or owning a house is a preference, and a choice that people make.

    I am choosing to opt out of buying a house, and I certainly won't make a down payment on a house either. The money that I am currently saving is, for a home, but NOT a house.

  • ?
    Lv 6
    8 months ago

    One reason is because the down payment actually generates the banks ability to generate the loan amount. The money doesn't exist until your down payment creates it.

  • 8 months ago

    before they grant you a loan on a house they want to make sure that you have skin in the game.

  • 8 months ago

    It gives you some skin in the game.

    In other words, it gives you something to lose if you default on the loan.

  • Anonymous
    8 months ago

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