Latest Answer: Hi Vinay, The system of down payment exists because of the following reason---
1. It indicates borrower's credit worthiness due to access to the down payment.
2. The amount of real investment a borrower has in their purchase and their truth in continuing to make payments regularly are linked.
3. It acts as a sort of insurance for lenders, since borrowers know that if they default on their loan; they will not only lose the property but their down payment as well.
