All about down payments The amount of money that you put towards your home is not necessarily the amount of your down payment. Some of the money will be going to cover your settlement costs. Do you know what your down payment actually is? It is the difference between what your property is actually worth and the amount of your mortgage loan. Very often, even if you put a substantial down payment down you will still have to purchase insurance on your mortgage. And it does not matter if you pay your settlement costs in cash or if you finance them, as far as your loan it is all the same thing. General underwriting rules are concerned with the LTV rather than you actual down payment. This makes things much simpler for everyone. When your LTV is over 80 percent then you will have to pay for mortgage insurance. I cannot tell you how many times I have been asked just what can count as a down payment. If you buy a house for less than it is worth, the amount between cannot be used as a don payment. You will find that the down payment and the LTV are determined not by that but by which is the lower of the two. Although if you are getting the house from a family member you will probably be getting a good deal and in this case an exception can be made and a lender may accept the appraisal value. If this is something that you are planning to do make sure that you realize that you will need to get two appraisals. If you already own the lab and you need to mortgage loan for the house you are planning to build there is a good chance that you will be able to use the land as a down payment, or at least as part of it. The longer you have had the property and the more equity that you have built in it, the more you will have to put towards your down payment.