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“Down Payment Knowledge Test: Are You Ready to Buy a Home?”

Leave a Comment / By josephallay7122@gmail.com / October 25, 2025

Welcome to your “Down Payment Knowledge Test: Are You Ready to Buy a Home?”

1. What is a down payment?

A) A fee paid to your real estate agent

B) The upfront amount paid toward the home’s purchase price

C) A monthly mortgage payment

D) A property tax payment

None

2. Why do lenders recommend a 20% down payment?

A) It increases your interest rate

B) It helps you avoid Private Mortgage Insurance (PMI)

C) It makes your loan term shorter

D) It covers property taxes

None

3. What is the minimum down payment for an FHA loan?

A) 0%

B) 5%

C) 3.5%

D) 10%

None

4. Which loan type may allow you to buy a home with 0% down?

A) Conventional loan

B) FHA loan

C) VA loan

D) Jumbo loan

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5. How does a larger down payment affect your mortgage?

A) Increases your total interest

B) Reduces your loan balance and monthly payments

C) Extends your loan term

D) Has no effect

None

6. What happens if you put down less than 20% on a conventional loan?

A) You must pay Private Mortgage Insurance (PMI)

B) You lose your loan eligibility

C) You get a higher loan limit

D) Your interest rate drops

None

7. Can gift money be used for a down payment?

A) No, only your personal savings

B) Yes, but it must be documented properly

C) Only for cash purchases

None

8. What percentage of home price is typically paid as closing costs?

A) 1–2%

B) 2–5%

C) 5–10%

D) 10–15%

None

9. Why is saving for a larger down payment beneficial?

A) It delays your loan approval

B) It increases your mortgage insurance

C) It lowers your total borrowing cost

D) It reduces your credit score

None

10. When should you start saving for a down payment?

A) After applying for a mortgage

B) When you start house hunting

C) As early as possible

D) Only after pre-approval

None

Time's up

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