Down payment and closing costs are typically two very distinctly different items.
10-First of all, down payment typically refers to the amount a buyer's bank requires out of pocket from a buyer towards the property acquisition. In a nut shell, using an FHA example of 96.5% financing, a buyer would then be required to put down 3.5% to make up the difference. Conversely 90% financing would require a buyer down payment of 10%. On the other hand, closing costs consist of items that typically have nothing to do with principal reduction. These items can include pre-paid interest, tax and insurance escrows, attorney fees, title insurance, etc.
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