What does "down payment" refer to in a property purchase?

In the context of a property purchase, "down payment" specifically refers to the initial amount paid by the buyer towards the purchase price of the property. This payment is made upfront at the time of closing and is typically expressed as a percentage of the overall price. The purpose of the down payment is to demonstrate the buyer's commitment to the purchase and to reduce the amount of financing needed through a mortgage loan.

Making a down payment can also influence the terms of the loan, such as the interest rate and whether private mortgage insurance (PMI) is required. A larger down payment can potentially lead to better loan terms and lower monthly payments.

Other options detail aspects of the home buying process but do not accurately define a down payment. The total cost of a property includes all associated expenses, while closing costs consist of additional fees that may arise from the purchase but are distinct from the down payment itself. The interest portion of a mortgage refers to the cost of borrowing money, which is separate from the initial investment made by the buyer. Thus, identifying the down payment as the initial amount paid by the buyer is precisely accurate within the real estate transaction context.