REIPRIME Logo
Intermediate terms

Essential Down Payment Savings Terms

This curated collection includes key terms that might be helpful when exploring how to save for a down payment. It covers various strategies, financial tools, and important considerations for accumulating the initial investment in a property. These terms were selected based on common questions and areas where investors often need clarity.

Learning Path

1

Grant Programs

Grant programs provide non-repayable financial assistance from government, non-profit, or private sources for specific real estate purposes, such as homeownership, rehabilitation, or community development, reducing an investor's out-of-pocket expenses.

Intermediate2-3 min
2

Gift Funds

Gift funds are money provided by an eligible donor, typically a family member, to a homebuyer to help cover a down payment or closing costs. These funds are not expected to be repaid.

Beginner2-3 min
3

Real Estate Investment Budgeting

Real estate investment budgeting is the process of creating a detailed financial plan to estimate all expected income and expenses associated with an investment property, guiding financial decisions and ensuring profitability.

Intermediate14-15 min
4

Goal Setting

Goal setting in real estate investing is the process of defining clear, measurable, and achievable targets for your investment activities, providing direction and a roadmap for success.

Beginner2-3 min
5

Closing Costs

Closing costs are the various fees and expenses incurred by buyers and sellers at the end of a real estate transaction, covering services like loan origination, title insurance, appraisal, and legal fees.

Intermediate13-14 min
6

Investment Account

An investment account is a financial account used to hold various investment assets, such as stocks, bonds, mutual funds, and real estate-related securities, facilitating wealth accumulation and specific financial goals.

Intermediate5 min
7

Financial Planning

Financial planning is the comprehensive process of managing your money to achieve personal and investment goals, involving budgeting, saving, investing, and risk management.

Beginner5-6 min
8

Debt-to-Income Ratio

The Debt-to-Income (DTI) Ratio is a financial metric used by lenders to assess a borrower's ability to manage monthly payments and repay debts, calculated by dividing total monthly debt payments by gross monthly income.

Intermediate18-20 min
9

Emergency Fund

A readily accessible pool of money set aside to cover unexpected financial challenges, crucial for both personal and real estate investment stability.

Beginner2-3 min
10

Savings Account

A deposit account held at a bank or financial institution that provides a secure place to store money while earning a small amount of interest, typically used for short-term savings goals or emergency funds.

Beginner2-3 min
11

Down Payment

A down payment is an initial upfront payment made when purchasing a property, representing a portion of the total purchase price and reducing the amount of money borrowed through a mortgage.

Intermediate15-18 min
12

Cash Reserves

Cash reserves are readily available funds held by a real estate investor to cover unexpected property expenses, operational shortfalls, or periods of vacancy, ensuring financial stability and risk mitigation.

Intermediate2-3 min
13

Compounding Interest

Compounding interest is the process where an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time, leading to exponential growth.

Intermediate2-3 min
14

Mortgage Pre-approval

Mortgage pre-approval is a formal assessment by a lender of how much money you can borrow for a mortgage, based on your verified financial information, providing a strong advantage when making an offer on a property.

Beginner15-18 min
15

Loan-to-Value Ratio

The Loan-to-Value (LTV) ratio is a financial metric used by lenders to assess the risk of a mortgage loan, calculated by dividing the loan amount by the property's appraised value, expressed as a percentage.

Intermediate14-15 min
16

Financial Discipline

Financial discipline is the practice of managing your money responsibly and consistently adhering to a financial plan to achieve your investment and personal financial goals.

Beginner2-3 min
17

Debt Reduction

Debt reduction is the strategic process of paying down outstanding loan balances, particularly mortgages, faster than scheduled to minimize interest expenses, increase equity, and improve an investor's financial position.

Intermediate5 min
18

High-Yield Savings Account

A type of savings account that offers significantly higher interest rates than traditional savings accounts, typically provided by online banks and FDIC-insured.

Intermediate3 min
19

FHA Loan

An FHA loan is a government-insured mortgage backed by the Federal Housing Administration, offering lower down payments and more flexible credit requirements to make homeownership more accessible.

Intermediate15-18 min
20

Automated Savings

Automated savings is a financial strategy that involves regularly transferring a set amount of money from one account to another without manual intervention, helping investors consistently build capital for real estate goals.

Beginner2-3 min
21

Earnest Money

Earnest money is a deposit made by a buyer to a seller, held in escrow, demonstrating the buyer's serious intent to purchase a property and serving as security against buyer default.

Intermediate13-14 min
22

Escrow

A legal arrangement where a neutral third party holds funds and documents until specific conditions of a contract are met, ensuring a secure and fair transaction, especially in real estate.

Intermediate15-18 min
23

VA Loan

A mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA) for eligible service members, veterans, and surviving spouses, offering benefits like no down payment and no private mortgage insurance.

Intermediate12-13 min
24

Private Mortgage Insurance

Private Mortgage Insurance (PMI) is a type of insurance required by lenders for conventional loans when a borrower makes a down payment of less than 20%, protecting the lender in case of default.

Intermediate15-18 min
25

Conventional Loan

A conventional loan is a mortgage not backed by a government agency, adhering to Fannie Mae and Freddie Mac guidelines, commonly used by real estate investors for various property types.

Intermediate11-12 min
26

First-Time Homebuyer Programs

Government-backed and private initiatives designed to help individuals purchase their first home by offering financial assistance, favorable loan terms, and educational resources.

Intermediate5-6 min