Traditional Down Payment and Mortgage Insurance

If you do not qualify for 100% home financing, then you will need to consider making a traditional down payment on your home -- typically 20 percent of the loan amount. The down payment reduces the lender's risk and shows your commitment to investing in the property. 
 
If you make less than a 20 percent down payment, your lender may require mortgage insurance, which typically ranges from $25 to $70 a month for a $100,000 mortgage. Mortgage insurance protects the lender if you are unable to make payments and default on the mortgage. When the equity in your home exceeds 20 percent, your mortgage insurance requirement may automatically be canceled.