In the next few articles we’ll be discussing how much of a downpayment should you place on a home. Before we can answer that question we need to first understand why downpayments are even important to sellers and lenders.

Reason number one- The seller may need cash for the downpayment on the next piece of property he or she is buying.

Reason number two- To protect himself or herself in case the value of the home declines. If you were to default on your payments then the seller will take back the house and sell it again. If the value of the house declined the seller/lender ends up losing money on the house.

Reason number three- If someone purchases a property with a downpayment, then that individual has something invested in that property. Therefore, from the seller or lender point of view, the buyer is more likely to take care of the property.