The down payment on a home can be the biggest obstacle for potential home buyers, especially first time home buyers. Fortunately, banks have become a lot more willing to provide mortgages to people with small down payments or even no down payment at all.

Most lenders will require a down payment of 5% to 20% in cash up front. If you are able to put down a more substantial amount, say 30% or more, a bank may be able to disregard credit problems and proof of income. If you are unable to pay at least 20% as a down payment, you may be required to get private mortgage insurance or PMI for short. This is an insurance policy for the bank that protects them against you not paying your bills.

The more you are able to put down as a down payment, the more expensive of a home you will be able to buy with a loan. Your maximum monthly payment should only be about 30% of your gross income. So if you make $60,000 a year you should be buying a home that costs no more than $1,800 a month. This figure should include all costs associated with owning your home such as the mortgage payment, taxes, insurance and a few hundred a month for regular maintenance.

The larger the down payment you make, the lower your interest rate will typically be. A lower interest rate can save you thousands over the course of your mortgage, which can easily pay back the extra money you spend on a down payment. You’re better off putting a larger down payment on a less expensive house and then moving in a few years than spending every dime you have on a small down payment for a more expensive home. Down payment is by far the most influential factor when getting a mortgage.