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Down Payments

Plan ahead and save for down payments on larger loans

A down payment on a loan has potential advantages like lessening your loan amount, shortening the loan term, and affecting your rate. Planning ahead and saving for a down payment and upfront costs can make a big difference on some larger purchases.

First Source Senior Vice President and Director of Member Services Amy DeMetri talks about down payments in her video below. 

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What is a down payment?

A down payment is money you have saved to use up front when getting a loan. This money is put toward the actual item you are financing, or to pay up-front, out-of-pocket costs associated with the loan. For example, money saved for a down payment on a home, in addition to reducing the amount you need to borrow, could also pay for an appraisal, inspections, and legal/closing fees.

Happy couple in front of their home.

Why save for a down payment?

A down payment can have a number of advantages including:

  • Lessening the amount you need to borrow

  • Shortening the length or term of the loan

  • Sometimes resulting in a better rate

  • Showing the lending institution good faith up front

Down payments can be helpful for any big ticket purchase, including boats, campers, or farm equipment. For smaller loan amounts or shorter term loans, a down payment may not be necessary. We can help you determine whether your loan may require one.

Funding a down payment

Often we see people waiting to withdraw money from existing long-term savings for a down payment. We recommend starting a new savings fund just for a down payment, as long term savings usually take time to build. It's generally harder to replenish those funds than to start a new savings goal and make monthly loan payments.

When we work on a down payment goal, we'll talk about the purchase price; your current income, debt, and savings; and whether you’ll have funds from a sale or trade-in.

Auto Loan down payments

Considering an auto purchase? There are several down payment considerations specific to this type of loan.

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Mortgage Loan down payments

When a new house is part of your plans, you many have questions about how a down payment will affect your costs. 

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Plan Smarter

We can help you consider whether you need to make a down payment, and how much you might need. Watch our video below for a brief overview of down payments from Senior Vice President Amy DeMetri, then plan ahead by making an appointment to speak to one of our representatives.

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Amy DeMetri discusses how a down payment could make a difference in your loan, including decreasing the amount you need to borrow, and shortening the term of your loan.

Not sure which term is right for you?

Check out our helpful loan comparison calculator.

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*Federally insured by NCUA. Membership and credit requirements apply. Rates and terms determined by overall credit history and subject to change.