Does a larger down payment make an offer stronger?
There is some element of truth to what your realtor said.  The seller takes the house off the market after the offer is accepted but the contract is contingent upon, among other things, buyer securing the financing. A lower down payment can mean a higher chance of failing that. The buyer might be going through FHA, VA or other programs that have additional restrictions. If the buyer fails to secure a financing, that's weeks and months lost to the seller. In a seller's market, this can be an important factor in how your bid is perceived by the seller. Sometimes it even helps to disclose your credit score, for the same reason. Of course for your situation you will have to assess whether this is the case. Certainly do not let your realtor push you around to do things you are not comfortable with. Edit:  A higher down payment also helps in the situation where the house appraisal does not fare well.  As @Dilip Sarwate has pointed out, the particular area you are interested in is probably a seller's market, thus giving sellers more leverage in picking bids. All else equal, if you are the seller with multiple offers coming in at similar price level, would you pick the one with 20% down or 5% down? While it is true that realtors have their own motives to push through a deal as quickly as possible, the sellers can also be in the same boat. One less mortgage payment is not trivial to many. It's a complicated issue, as every party involved have different interests. Again, do your own due diligence, be educated, and make informed decisions. First, let me say that you have to take everything your agent says with a grain of salt. Freakonomics had a great article that discussed the math behind the motivation of the real estate agent.  It described the home seller, trying to get, say $400K. On a 6% commission, the $24K is destined to be split between seller realtor office and buyer's realtor's office. The selling agent gets $6,000 (or so) in the end. As a seller, if I settle for $380K, my realtor is only out $300, netting $5700. But $20K lower sale price, and I just lost nearly $19K after commission is paid.  The agent would have the natural goal of volume, not extracting the last dollar from the buyer. Gaining back the last $20K to the seller will cost the realtor far more than $300 in her time, keeping the house on the market and waiting for the better offer.  Sellers might use down payment as one way to estimate the probability of the financing falling through, but it's a rough estimate at best because, in the case of bank financing, the bank needs the same time to run through the paperwork for a 3% down or a 20% down. It's just as easy for the buyer to qualify or not qualify for one loan or the other. There are young couples with great incomes and no debt, who blow away the required ratios for proposed debt to income, but haven't saved up the otherwise huge 20% downpayment. Then there are those who have saved for years, even having 30% to put down, but their income is still not going to qualify them. The offer will be contingent on the financing, regardless. It will show that you are putting $XX dollars as a downpayment, and the final transaction is contingent on your bank approving you. "There is considerable truth to what your realtor said about the Jersey City NJ housing market these days. It is a ""hot"" area with lots of expensive condos being bought up by people working on Wall Street in NYC (very easy commute by train, etc) and in many cases, the offers to purchase can exceed the asking price significantly. Be that as is may, the issue with accepting a higher offer but smaller downpayment is that when the buyer's lender appraises the property, the valuation might come in lower and the buyer may have to come up with the difference, or be required to accept a higher interest rate, or be refused the loan altogether if the lender estimates that the buyer is likely to default on the loan because his credit-worthiness is inadequate to support the monthly payments. So, the sale might fall through. Suppose that the property is offered for sale at $500K, and consider two bids, one for $480K with 30% downpayment ($144K) and another for $500K with 20% downpayment ($100K).  If the property appraises for $450K, say, and the lender is not willing to lend more than 80% of that ($360K), then Buyer #1 is OK; it is only necessary to borrow  $480K - $144K = $336K, while Buyer #2 needs to come up with another $40K of downpayment to be able to get the loan, or might be asked to pay a higher interest rate since the lender will be lending more than 80% of the appraised value, etc. Of course, Buyer #2's lender might be using a different appraiser whose valuation might be higher etc, but appraisals usually are within the same ballpark.  Furthermore, good seller's agents can make good estimates of what the appraisal is likely to be, and if the asking price is larger than the agent's estimate of appraised value, then it might be to the advantage of the selling agent to recommend accepting the lower offer with higher downpayment over the  higher offer with smaller downpayment. The sale is more likely to go through, and an almost sure 6% of $480K (3% if there is a buyer's agent involved) in hand in 30 days time is worth more than a good chance of nothing at the end of 15 days when the mortgage is declined, during which the house has been off the market on the grounds that the sale is pending. If you really like a house, you need to decide what you are willing to pay for it and tailor your offer accordingly, keeping in mind what your buyer's agent is recommending as the offer amount (the higher the price, the more the agent's commission), how much money you can afford to put down as a downpayment (don't forget closing costs, including points that might be need to be paid), and what your pre-approval letter says about how much mortgage you can afford.  If you are Buyer #1, have a pre-approval letter for $360K,  and have enough savings for a downpayment of up to $150K, and if you (or your spouse!)  really, really, like the place and cannot imagine living in any other place, then you could offer $500K with 30% down (and blow the other offer out of the water). You could even offer more than $500K if you want. But, this is a personal decision.  What your realtor said is perfectly true in the sense that for Y > Z, an offer at $X with $Y down is better than an offer at $X with $Z down. It is to a certain extent true that for W > X, a seller would find an offer at $X with $Y down to be more attractive that an offer at $W with $Z$ down, but that depends on what the appraisal is likely to be, and the seller's agent's recommendations." There is a lot of your financial information that the selling agent handles in the course of a real estate transaction, including but not limited to your pre-approval letter which states what maximum purchase price might be. Closing costs and interest rate are not details they would know unless you shared that with them, given that that is done after you go binding.  I agree with xiaomy in that, while in absolute monetary terms the higher amount should always be more attractive, the selling agent wants to ensure the transaction goes as smoothly as possible. With contracts falling through due to first-time buyers not making it through mortgage underwriting, it is in the seller's interest - and thus the seller's agent's concern - that the buyer not present such hurdles. Insofar as a higher down payment is a signal for that, then I can understand why it would be more attractive.
"a link to this article grabbed my Interest as I was browsing the site for something totally unrelated to finance.  Your question is not silly - I'm not a financial expert, but I've been in your situation several times with Carmax Auto Finance (CAF) in particular. A lot of people probably thought you don't understand how financing works - but your Car Loan set up is EXACTLY how CAF Financing works, which I've used several times. Just some background info to anyone else reading this - unlike most other Simple Interest Car Financing, with CAF, they calculate per-diem based on your principal balance, and recalculate it every time you make a payment, regardless of when your actual due date was.  But here's what makes CAF financing particularly fair - when you do make a payment, your per-diem since your last payment accrued X dollars, and that's your interest portion that is subtracted first from your payment (and obviously per-diem goes down faster the more you pay in a payment), and then EVerything else, including Any extra payments you make - goes to Principal. You do not have to specify that the extra payment(S) are principal only. If your payment amount per month is $500 and you give them 11 payments of $500 - the first $500 will have a small portion go to interest accrued since the last payment - depending on the per-diem that was recalculated, and then EVERYTHING ELSE goes to principal and STILL PUSHES YOUR NEXT DUE DATE (I prefer to break up extra payments as precisely the amount due per month, so that my intention is clear - pay the extra as a payment for the next month, and the one after that, etc, and keep pushing my next due date). That last point of pushing your next due date is the key  - not all car financing companies do that. A lot of them will let you pay to principal yes, but you're still due next month. With CAF, you can have your cake, and eat it too. I worked for them in College - I know their financing system in and out, and I've always financed with them for that very reason.  So, back to the question - should you keep the loan alive, albeit for a small amount. My unprofessional answer is yes! Car loans are very powerful in your credit report because they are installment accounts (same as Mortgages, and other accounts that you pay down to 0 and the loan is closed). Credit cards, are revolving accounts, and don't offer as much bang for your money - unless you are savvy in manipulating your card balances - take it up one month, take it down to 0 the next month, etc. I play those games a lot - but I always find mortgage and auto loans make the best impact.  I do exactly what you do myself - I pay off the car down to about $500 (I actually make several small payments each equal to the agreed upon Monthly payment because their system automatically treats that as a payment for the next month due, and the one after that, etc - on top of paying it all to principal as I mentioned).  DO NOT leave a dollar, as another reader mentioned - they have a ""good will"" threshold, I can't remember how much - probably $50, for which they will consider the account paid off, and close it out. So, if your concern is throwing away free money but you still want the account alive, your ""sweet spot"" where you can be sure the loan is not closed, is probably around $100.  BUT....something else important to consider if you decide to go with that strategy of keeping the account alive (which I recommend). In my case, CAF will adjust down your next payment due, if it's less than the principal left. SO, let's say your regular payment is $400 and you only leave a $100, your next payment due is $100 (and it will go up a few cents each month because of the small per-diem), and that is exactly what CAF will report to the credit bureaus as your monthly obligation - which sucks because now your awesome car payment history looks like you've only been paying $100 every month - so, leave something close to one month's payment (yes, the interest accrued will be higher - but I'm not a penny-pincher when the reward is worth it - if you left $400 for 1.5 years at 10% APR - that equates to about $50 interest for that entire time - well worth it in my books. Sorry for rambling a lot, I suck myself into these debates all the time :)" One thing that a high down payment does is improve the chance that the seller will accept your offer.  Sellers also want to know that your offer is a serious one, and the closer you are to an all-cash buyer, the better.  I've heard of sellers letting OK offers sit on the table because they didn't like the down payment amount. "@Joe's original answer and the  example with proportionate application of the payment to the two balances is not quite what will happen with US credit cards. By US law (CARD Act of 2009), if you make only the minimum  required payment (or less), the credit-card company can choose which part of the balance that sum is applied to. I am not aware of any company that chooses to apply such payments to anything other than that part of the balance which carries the least interest rate  (including the 0% rate that ""results"" from acceptance of balance transfer  offers). If you make more than the minimum required payment, then the excess must, by law, be applied to paying off the highest rate balance. If the highest rate balance gets paid off completely, any remaining amount must be applied to second-highest rate balance, and so on.  Thus, it is not the case that that $600 payment (in Joe's example) is applied proportionately to the $5000 and $1000 balances owed. It depends on what the required minimum payment is. So, what would be the minimum required payment? The minimum payment is the total of (i) all finance charges incurred during that month, (ii) all service fees and penalties (e.g. fee for exceeding credit limit, fee for taking a cash advance, late payment penalty) and other charges (e.g. annual card fee) and (iii) a fraction of the outstanding balance that (by law) must be large enough to allow the customer to pay off the entire balance in a reasonable length of time. The law is silent on what is reasonable, but most companies use 1% (which would pay off the balance over 8.33 years).  Consider the numbers in Joe's example together with the following assumptions: $5000 and $1000 are the balances owed at the beginning of the month, no new charges or service fees during that month, and the previous month's minimum monthly payment was made on the day that the statement paid so that the finance charge for the current month is on the balances stated). The finance charge on the $5000 balance is $56.25, while the finance charge on the $1000 balance is $18.33, giving a minimum required payment of $56.25+18.33+60 = $134.58. Of the $600 payment, $134.58 would be applied to the lower-rate balance ($5000 + $56.25 = $5056.25) and reduce it to $4921.67. The excess $465.42 would be applied to the high-rate balance of $1000+18.33 = $1018.33 and reduce it to $552.91. In general, it is a bad idea to take a cash advance from a credit card. Don't do it unless you absolutely must have cash then and there to buy something from a merchant who does not accept credit cards, only cash, and don't be tempted to use the ""convenience checks"" that credit-card companies send you from time to time. All such cash advances not only carry larger rates of interest (there may also be upfront fees for taking an advance) but any purchases made during the rest of the month also become subject to finance charge. In other words, there is no ""grace period"" for new charges, and this state of affairs will last for one month beyond the first credit-card statement whose statement is paid off in full in timely fashion. Finally, turning to the question asked, viz. "" I am trying to determine how much I need to pay monthly to zero the balance, ...."", as per the above calculations, if the OP makes the minimum required payment of $134.58 plus $1018.33, that $134.58 will be applied to the low-rate balance and the rest $1018.33 will pay off the high-rate balance in full if the payment is made on the day the statement is issued. If payment is made later, but before the due date, that $1018.33 will be accruing finance charges until the date the payment is made, and these will appear as 22% rate balance on next month's statement. Similarly for the low-rate balance. What if several monthly payments will be required? The best calculator known to me is at https://powerpay.org (free but it is necessary to set up a username and password).  Enter in all the credit card balances and the different interest rates, and the total amount of  money that can be used to pay off the balances, and the site will lay out a payment plan.  (Basically, pay off the highest-interest rate balance as much as possible while making minimum required payments on the rest). Most people are surprised at how much can be saved (and how much shorter the time to be debt-free is) if one is willing to pay just a little bit more each month." Why don't you just put your down payment on one of your credit cards? (Note: I'm not actually suggesting that you do this. Please read on.) There are a few reasons why you wouldn't (or couldn't) do this: The interest rates on the cards you have is very high.  You don't have enough of a credit limit on any one of your cards for the down payment.  These two reasons highlight the answer to your question.  Credit card companies charge very high interest rates. These high rates allow them to make money even when some of their customers default. They know that not everyone will pay them back, so they make sure to make a hefty profit on those who do.  Secondly, credit card limits are often much lower than the amounts of car and home loans. This limits the risk to the credit card company. Sure, you have $100,000 in total credit limit, but this is split among nine different companies.  When a bank offers a traditional loan for a large sum of money at relatively low interest, they need to be able to limit their risk somehow. They do this by ensuring that their customers actually have the ability to pay them back. This is horse-trading, *not business*.  But if Person 2 has an offer for 38K, then the item is sold, and he's not even talking to you. But if he IS talking to you, and he has a deal with the 38K man, and you offer 39K, and he accepts, that is known as gazumping; backing out of an agreed sale for a higher offer.  Given that a verbal agreement is legally binding - gazumping is illegal.  BUT! Sale price is always dependent on two things; a willing seller and a willing buyer. Without these two things, no sale can take place. And price is immaterial unless one of the parties is mentally deficient; if both parties agree to a sale price, then a valid sale can take place.  People place different values on things, and that is why an item can sell, and both parties can be happy! You might have been happy to pay 40K for the item, and consider 39 a bargain. The seller might only have wanted 35, but wanted to see how high he could push you, to try to find out what YOUR highest possible price is for the item.  If you are actually in business, then trading on lies is a recipe for failure. Uber is a great example of company founded on lies, which exploits morons, and which operates illegally in every location. Uber will never succeed, because it does not operate in a truthful, transparent, or legal manner.  Practicing lying in business is a great way to get a bad reputation really quickly. And in many instances, lying will be breaking the law. Lying about warranties, materials, things like that. "I don't follow the numbers in your example, but the fundamental question you're asking is, ""If I can borrow money for a low cost, and if I think I can invest it and receive returns greater than that cost, should I do it?"" It doesn't matter where that money comes from, a mortgage that's bigger than it needs to be, a credit card teaser rate, or a margin line from your stock broker. The answer is ""maybe"" - depending on the certainty you have about the returns you'd receive on your investments and your tolerance for risk. Only you can answer that question for yourself. If you make less than your mortgage rates on the investments, you'll wish you hadn't! As an aside, I don't know anything about Belgian tax law, but in US tax law, your deductions can be limited to the actual value of the home. Your law may be similar and thus increase the effective mortgage interest rate." I'm not sure about your first two options.  But given your situation, a variant of option three seems possible.   That way you don't have to throw away your appraisal, although it's possible that you'll need to get some kind of addendum related to the repairs.   You also don't have your liquid money tied up long term.  You just need to float it for a month or two while the repairs are being done.  The bank should be able to preapprove you for the loan.   Note that you might be better off without the loan.  You'll have to pay interest on the loan and there's extra red tape.   I'd just prefer not to tie up so much money in this property.   I don't understand this.  With a loan, you are even more tied up.  Anything you do, you have to work with the bank.  Sure, you have $80k more cash available with the loan, but it doesn't sound like you need it.  With the loan, the bank makes the profit.  If you buy in cash, you lose your interest from the cash, but you save paying the interest on the loan.  In general, the interest rate on the loan will be higher than the return on the cash equivalent.   A fourth option would be to pay the $15k up front as earnest money.  The seller does the repairs through your chosen contractor.  You pay the remaining $12.5k for the downpayment and buy the house with the loan.  This is a more complicated purchase contract though, so cash might be a better option.   You can easily evaluate the difficulty of the second option.  Call a different bank and ask.  If you explain the situation, they'll let you know if they can use the existing appraisal or not.  Also consider asking the appraiser if there are specific banks that will accept the appraisal.  That might be quicker than randomly choosing banks.   It may be that your current bank just isn't used to investment properties.  Requiring the previous owner to do repairs prior to sale is very common in residential properties.  It sounds like the loan officer is trying to use the rules for residential for your investment purchase.  A different bank may be more inclined to work with you for your actual purchase. I am not a financial expert, but I'm pretty sure that it DOES matter.  When you take out a mortgage on a home, you are using the home itself as collateral. If you fail to make payments on that home, and go into foreclosure, the bank takes possession of your home. With that understanding, imagine you borrow $500K for a purchase of a home. If the cost of the home was $1M, the bank will have more confidence they can recover the money they lent you (by selling the home should it go into foreclosure) than they would if the house was only worth $700K. In effect, the larger your down payment, the easier it would be for the bank to recover their money should you go into foreclosure early on. As far as 50% overcoming a low credit score... that's a very open-ended question. There are just too many factors at play to give a simple yes or no answer to that.