What term describes the amount of money a buyer pays upfront in a property purchase?

The term that describes the amount of money a buyer pays upfront in a property purchase is known as a down payment. This payment is typically a percentage of the total purchase price and serves as a sign of the buyer's commitment to the transaction. The down payment reduces the amount that needs to be financed through a mortgage, directly impacting the loan amount and potentially influencing the terms of the mortgage agreement.

The concept of a down payment is crucial in real estate transactions because it not only demonstrates financial capability but also affects the buyer's equity in the property right from the start. A larger down payment typically results in lower monthly mortgage payments and can also help avoid private mortgage insurance (PMI) in some cases.

Closing costs refer to the fees and expenses associated with finalizing a real estate transaction, which are paid at the closing stage, and earnest money represents a deposit made to demonstrate the buyer's serious intent to purchase the property, typically handled before the closing process begins. Mortgage payments are regular payments made towards a loan used to finance the property, which include both principal and interest over the life of the loan. Each of these terms plays a distinct role in the home buying process, but the down payment is specifically the upfront financial contribution.