Large Down Payment

• The advantages of a large down payment are lower monthly payments and faster home equity. A large down payment also reduces risk for your lender, which increases the likelihood that the bank will approve your loan.
  
  

Shortened Term

• If you are in a position to make a large down payment and have a comfortable monthly cash flow, consider shortening the term of your mortgage. Entering into a 15-year mortgage instead of a 30-year mortgage can save tens, if not hundreds, of thousands of dollars over the life of the loan.
  
  

Small Down Payment

• Making a low down payment has advantages. It's always wise to have three to six months worth of emergency cash on hand, and it is critical to be able to cover any needed repairs. Consider using any extra cash to pay down any existing debt. It will improve your debt-to-income ratio, which lenders look at closely, and raise your credit score. If the interest rate you are paying on the debt is higher than the interest rate on your mortgage, you definitely need to make the debt go away. Likewise, if you have investments earning a higher rate of return than the interest rate on your mortgage, try not to tap those investments.
  
  

PMI

• Private Mortgage Insurance (PMI) protects your lender in the event of a foreclosure and you are required to purchase it if your down payment is less than 20 percent. The cost of PMI coverage ranges from .32 to .78 percent of your mortgage balance, depending on the amount of your down payment. On a $200,000 mortgage, that amounts to $53.33 to $130 tacked onto your payment every month.
  
  

Down Payment Assistance

• U.S. veterans are eligible for home financing with no down payment. In 2009, countless first time home buyers received an $8,000 federal tax credit and were allowed apply it toward their down payments. Most realtors are knowledgeable about current programs.
  
  

Do the Math

• The bottom line is that no one cares about your financial interests more than you, so don't leave calculations to chance. Before signing loan documents, crunch the numbers on several scenarios and look at the total amount of money you will pay for your home over the lifetime of the loan.