Putting a larger down payment onto a home purchase helps lower the loan-to-value (low LTV) ratio. It also means the borrower is less likely to walk away from making mortgage payments if they already put down a large sum of money.

Lenders like to see that borrowers have more skin in the game.

A small down payment (high LTV) will lead the lender to evaluate the situation as more risky, and they will issue you a mortgage loan with higher interest rates instead to protect themselves against a higher risk of default.

Think about whether you want to repay a high interest rate loan or a lower interest rate loan by deciding on how much of a down payment you want to make.

Categories: Finance

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