The down payment is the part of the purchase price the buyer pays in cash and does not finance with a mortgage. Down payments are described as a percentage of the home’s selling price. For example, a 20% down payment on a $100,000 home is $20,000.

The type of mortgage determines the minimum down payment needed, usually ranging from 0% to 20%.

Veterans Administration loans are designed to help service people and veterans obtain financing at very reasonable rates. They don’t require a down payment or mortgage insurance.

The Federal Housing Administration was created to help middle- to lower-income buyers secure home loans. The FHA doesn’t actually lend the money; instead, it insures the loan. The FHA requires only a 3.5% down payment. There are guidelines and the buyer’s credit is important to meeting these requirements.

Although you may not have to put a full 20 percent down to buy a home or rental property, it is wise to put down as much as possible. A down payment shows lenders that you are serious about the purchase. It also creates equity, helps your credit score and often lowers your interest rate. As an added bonus, whatever you put down is money you won’t be paying interest on. Save as much as you can toward the down payment and be sure to pay off as much debt as possible before applying.