- A partial payment made at the time of purchase or when a loan originates with the balance to be paid later. First-time home buyers are allowed to put as little as 5% down when purchasing a property.
initial payment, initial cash investment, upfront portion
Related Terms and Acronyms
- Buy-down — Definition,
- When a borrower or a mortgage broker "buys down" a mortgage rate, they make an upfront payment to the lender in order to lower the mortgage rate. A similar effect can be achieved by making a lump sum payment at the beginning of a mortgage term.
- Cash Back Mortgage — Definition, Important,
- A mortgage that provides the borrower a lump sum cash payment.
- Conventional Mortgage — Definition, Important,
- A mortgage that is not insured or guaranteed by CMHC or GE Capital.
- High-ratio Mortgage — Definition, Important,
- A mortgage in which a borrower places a down payment of less than 20% of the purchase price.
- Home Buyers' Plan (HBP) — Acronym, Canada, Very Important,
➥ Government assistance for first-time homebuyers.
- A way for a homebuyer to use part of his or her RRSP as a down payment on a mortgage.
- Leverage — Definition,
- The use of a small amount of cash and a large loan to buy something.
- Low-down Mortgages — Definition, Important,
- Mortgages with a low down payment, usually less than 10 percent.
- Original Principal Balance — Definition,
- The amount borrowed.
- Pre-payment — Definition,
- Applying additional payments towards the balance of a mortgage loan.
- Pre-payment Clause — Definition,
- A clause that stipulates the amount of principal a borrower may prepay ahead of schedule without penalty as well as the prepayment penalty for larger prepayments.
- Pre-payment Penalty — Definition,
- A lender's charge to the borrower for paying off the loan before the end of the term.
- Purchase Price — Definition,
- The total selling price of the home, including the cash down payment and the principal on the loan.
- Seller Carryback — Definition,
- A form of financing in which the seller of a property accepts a down payment and agrees to accept payments until the property is paid for.
- Trade Equity — Definition,
- A swap of property, such as real estate or a car, as part of a down payment for other real estate.
- Zero Down Mortgage — Definition,
- A mortgage product that allows the borrower to financing 100% of their property.