Mortgage Down Payment – What Is It and How Much You Need?
The down payment is one of the key requirements of a mortgage, yet it is often misunderstood and can lead tocostly surprises. How much funds do you need, what can be qualified as a down payment, and how does it relate to the property price? In this article, we take a deep dive into the details of your own contirbution towards future home.
In this article you will learn:
- What a down payment is?
- What forms of down payment are accepted?
- If you have funds for a 10% down payment, should you take a mortgage right now or wait until you save 20%?
- How ‘Rodzinny Kredyt Mieszkaniowy’ (RKM in short) works – the only program offering mortgages without a down payment?
- Where and when the down payment should actually be paid?
What is a down payment?
A down payment is the amount of money that you, as a borrower, contribute when purchasing a property or building a house with a mortgage. For example, if you plan to buy a property for 700,000 PLN and take out a mortgage of 560,000 PLN , you will need a 140,000 PLN down payment. The relationship is simple: the larger the down payment, the smaller the loan amount.
A down payment is required because banks do not finance 100% of a property’s price. They require the borrower to contribute at least 10%, and ideally 20% of the property price (in some cases, an even higher percentage may be required). It all depends on the bank’s credit risk assessment, which can include factors such as:
- the type of property (type, size etc.)
- the location
- the purchase price
- your creditworthiness
What forms of down payment are accepted?
Down payment can take many different forms. While the most common is your own cash, there are several other ways in which a down payment can be paid in, for example:
- A donation (properly documented and reported to the tax office, with any applicable tax paid)
- A plot of land on which the house will be built, provided it is owned by the borrower and free of any mortgage
- The value of construction work already paid for (when building a house)
- The value of purchased building materials (when building a house)
- Another property owned by the borrower and free of any mortgages
- Funds accumulated in IKE/IKZE retirement accounts
- Funds accumulated within the employee capital plans (PPK)
- A housing savings book (pl: książeczka mieszkaniowa)
- A deposit (pl: zaliczka) or advance payment (pl: zadatek)
While cash, an advance payment, or a plot of land are accepted as a down payment by virtually every bank, the other items on the list may be accepted only by some of them.
No bank will accept funds coming from loans or credit as a down payment, regardless of whether they were issued by a bank, an employer, or a family member. In the mortgage application form, the borrower must declare that the down payment does not originate from such sources. For this reason, banks require borrowers to document the origin of every form of down payment.
How much money should I have for my down payment?
Why do banks require a 10% or 20% down payment? To answer this question, we first need to understand the concept of LtV, or Loan-to-Value.
LtV is simply the ratio of the loan amount to the value of the property being financed. For example, if we take out a loan of PLN 500,000 for a property worth PLN 700,000, the LtV will be:
500,000 / 700,000 = 71.4%
Why is LtV so important? Because according to Recommendation S of the Polish Financial Supervision Authority (KNF), for mortgage loans the loan-to-value ratio (LtV):
- should not exceed 80% of the property value at the time the loan is disbursed,
- may reach up to 90% of the property value, but once 80% is exceeded, additional collateral is required.
In practice, this additional collateral usually takes form of a higher interest rate (from +0.2 to even +1 percentage point) that is applied until the LtV falls below 80% and sometimes even for the entire loan period. This translates into a higher total cost of the mortgage.
What does this mean for the down payment?
It means that to obtain a mortgage, you will need funds equal to at least 10%, and preferably 20% of the property price.
However, there is one important exception to this rule — when the property value is lower than the price you are paying for it. This issue is often overlooked when discussing down payments, yet it is worth understanding in order to avoid unnecessary surprises.
What if the property price differs from its appraised value?
As you may have noticed, the loan-to-value ratio (LtV) refers to the value of the property. This value comes from an appraisal report prepared by a certified appraiser.
The down payment, on the other hand, is calculated as a percentage of the price we pay to the seller.
So what happens if the purchase price differs from the appraised value?
It can affect the amount of down payment required. Let’s look at three possible scenarios.
Example 1: The property price equals the appraised value
Property price: PLN 700,000
Appraised value: PLN 700,000
We want to avoid a higher interest rate and take a loan with 80% LtV.
In this case, the bank will grant a loan of:
80% × 700,000 PLN = 560,000 PLN
The required down payment will be:
700,000 PLN – 560,000 PLN = 140,000 PLN
This equals exactly 20% of the property price (or value).
No surprises in this scenario.
Example 2: The property price is higher than the appraised value
Property price: PLN 700,000
Appraised value: PLN 660,000
Again, we want to avoid higher interest rates and keep the LtV at 80%.
Even though we are buying the property for PLN 700,000, the bank will lend us 80% of the appraised value, which means:
80% × 660,000 PLN = 528,000 PLN
If we want to avoid additional costs related to low down payment insurance, we must cover the remaining part ourselves:
700,000 PLN – 528,000 PLN = 172,000 PLN
This is almost 25% of the purchase price, instead of the expected 20%.
The additional PLN 32,000 could significantly delay our mortgage plans. That is why it is worth knowing the approximate market value of the property as early as possible.
Example 3: The property price is lower than the appraised value
Property price: PLN 700,000
Appraised value: PLN 750,000
We stick to the same rule — we want 80% LtV.
If a lower valuation forced us to contribute more in the previous example, will the bank now reward us for finding a property at a bargain price?
Unfortunately, generally not. In this situation, the bank will use the lower amount from the pair: price or value, and grant a loan based on that figure:
80% × 700,000 PLN = 560,000 PLN
The higher property valuation will not reduce the down payment.
Just like in the first example, the down payment will be:
140,000 PLN, which is 20% of the property price.
Summary
If the purchase price of the property is equal to or lower than its appraised value, the minimum down payment will typically be 10% and 20% if you want to avoid increased costs. When it is higer, more funds may be required.
Should I take a mortgage with 10% down payment or wait until I save 20%?
You have savings for a 10% down payment. Should you take a mortgage right now or wait until you save for 20% to avoid increased cost?
This question often comes up during meetings with clients. Sometimes the dream property has already been found, and it won’t wait for us. We need to act quickly, but we may still be missing some funds to reach the optimal down payment, which means the cost of the mortgage will be higher.
What should you do in such a situation?
As a rule, making a 20% down payment seems like the more reasonable solution because it allows you to avoid additional costs. However, in some cases these costs are so small that delaying the purchase may not be worth it.
Example: 20% vs 10% Down Payment
20% Down Payment
Property price: PLN 700,000 (equal to the appraised value)
Loan parameters:
- Down payment: 20% × 700,000 PLN = 140,000 PLN
- Loan amount: 700,000 PLN – 140,000 PLN = 560,000 PLN
- LtV: 560,000 / 700,000 = 80%
- Interest rate: 6%
- Installments: Equal monthly payments
- Loan term: 25 years
Total interest paid on such mortgage would be PLN 522,426.
10% Down Payment
Property price: PLN 700,000 (equal to the appraised value)
Loan parameters:
- Down payment: 10% × 700,000 PLN = 70,000 PLN
- Loan amount: 700,000 PLN – 70,000 PLN =630,000 PLN
- LtV: 630,000 / 700,000= 90%
- Interest rate: 6.2% (increased by +0.2 percentage points until the loan reaches 80% LtV)
- Installments: Equal monthly payments
- Loan term: 25 years
In this case, the total interest cost will amount to PLN 595,829.
The difference in costs is PLN 73,289, which at first glance seems significant. However, we should remember that although we pay more in interest, we also contributed PLN 70,000 less in down payment.
Substracting this amount, we are left with additional cost of PLN 3,289 which no longer looks as substantial.
That being said, if we would assume less favorable conditions—for example, where the interest rate increases by 1 percentage point until the loan reaches 80% LtV — the total interest cost would go up to PLN 631,531. This translates into around 39,000 PLN higher costs.
What should you do?
The decision will depend on the rules applied by a given bank. That is why it should always be preceded by a careful financial calculation.
Besides the issue of low down payment insurance, there is another important factor that should be considered when deciding on the down payment size: real estate prices.
Rising real estate prices – impact on your down payment
Over the past 10 years, residential property prices in the largest cities in Poland have increased by an average of 5–7% per year. Naturally, the required down payments have been increasing along with them.
Of course, nobody knows how prices will behave in the future. However, if we assume that such growth continues, the question arises: will we be able to keep up with it with our savings?
According to a report by the Polish Economic Institute (PIE) from January 2026, the average price per square meter in the largest Polish cities (with populations of around 500,000+) reached:
- 14,900 PLN per m² on the primary market
- 14,300 PLN per m² on the secondary market
This translates into the following prices and required down payments for a 40 m² apartment:
- 595,300 PLN for a 40 m² apartment from a developer → 20% down payment: 119,100 PLN
- 572,700 PLN for a 40 m² apartment on the secondary market → 20% down payment: 114,500 PLN
How will these down payments grow if property prices continue to rise? The tables below illustrate this scenario assuming 6% annual price growth in both markets.
Numbers outside the brackets represent the 20% down payment amounts, while numbers in brackets show the increase compared with the previous year.
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Primary market | 119 100 zł | 126 211 zł (+7144 zł) | 133 783 zł (+7573 zł) | 141 810 zł (+8027 zł) | 150 319 zł (+8509 zł) |
| Secondary market | 114 500 zł | 121 405 zł (+6872 zł) | 128 690 zł (+7284 zł) | 136 411 zł (+7721 zł) | 144 596 zł (+8185 zł) |
In our hypothetical scenario, the down payments for 40 m² apartments would be rising by roughly 7,000–8,500 PLN per year. What does this mean for borrowers? If you save around 7,000–8,000 PLN per year (or roughly 600–700 PLN per month), then under these assumptions waiting may not make sense – you won’t be able to keep up with rising property prices.
So how much should you save each month to increase your down payment from 10% to 20% in a reasonable amount of time? The table below shows the monthly savings required to achieve this within a given time horizon (again, assuming 6% annual property price growth):
| 1 year | 2 years | 3 years | 4 years | |
| Primary market | 5556 zł | 3094 zł | 2285 zł | 1724 zł |
| Secondary market | 5345 zł | 2976 zł | 2198 zł | 1658 zł |
Numbers aren’t small. Not everybody can afford to save PLN 5,000 every month. In many cases, in our hypothetical scenario, increasing the down payment from 10% to 20% may require several years of consistent saving. This raises an important question:
Are you comfortable delaying the purchase of your property by such amount of time, and do you have the financial discipline to consistently save that much?
The above example serves illustration purposes only. It is based on several assumptions that may not materialize or simply not fit your specific situation. Its purpose is not to provide perfectly precise calculations but rather to illustrate that when selecting your down payment size, you should consider both:
- the higher borrowing costs associated with <20% down payment, and
- the pace at which property prices have been rising in Poland.
Only after considering both of these factors can you confidently determine which option will be best for you.
What if I don’t have money for the down payment?
What if you don’t have any funds for the downpayment and there is no realistic prospect of saving it anytime soon?
At the moment, there is only one way to obtain a mortgage without a down payment in Poland — the Rodzinny Kredyt Mieszkaniowy (RKM) program. Foreigners living in Poland qualify as well!
This program allows borrowers to take out a mortgage with less than a 10% down payment, or even with no down payment at all. However, it comes with a number of conditions.
Because the program is quite complex, we will discuss it in detail in a separate article. For now, let’s focus on the most important facts.
Rodzinny Kredyt Mieszkaniowy – how it works?
Under the program, all or part of your down payment is replaced by a guarantee provided by an institution called Bank Gospodarstwa Krajowego (BGK).
BGK does not transfer any money to the buyer or the seller. Instead, it simply guarantees repayment. This means that if the borrower fails to repay the loan, BGK will repay part or all of the guaranteed amount to the bank that granted the mortgage.
The BGK guarantee may cover up to 20% of the total purchase cost, but no more than 100,000 PLN. This means that:
- you can buy a property worth up to PLN 500,000 without any down payment,
- for properties above PLN 500,000, BGK will still guarantee up to PLN 100,000, and the borrower must cover the remaining part of the down payment.
Furthermore, the combined amount of the BGK guarantee and the borrower’s own contribution cannot exceed PLN 200,000. Because of this limit, the program can be used to purchase properties worth up to PLN 1,000,000. Below table shows down payment structure under the program for different mortgage amounts:
| Property price | Minimal downpayment under RKM (20%) | Covered by BGK | Covered by you |
| 300 000 zł | 60 000 zł | 60 000 zł | 0 zł |
| 500 000 zł | 100 000 zł | 100 000 zł | 0 zł |
| 700 000 zł | 140 000 zł | 100 000 zł | 40 000 zł |
| 1 000 000 zł | 200 000 zł | 100 000 zł | 100 000 zł |
The program covers both the purchase of an apartment and the construction of a single-family house, including finishing costs.
To qualify for the RKM, borrowers must meet several conditions. These requirements apply both to the borrower and to the property itself (including price limits per square meter). Their full scope is available on the websites of the Ministerstwo Rozwoju i Technologii or Bank Gospodarstwa Krajowego.
Where do I pay the down payment to?
Finally, let’s discuss the technical side — where exactly is the down payment paid?
Regardless of whether you are buying a new apartment from a developer or a property on the secondary market, the down payment is always transferred directly from your bank account to the seller’s account. Proof of payment is simply the bank transfer confirmation.
In the case of building a house, the down payment usually consists of construction costs paid from your own funds. Therefore, it is not transferred as a single payment but spent gradually in stages, according to the construction plan. In this situation, proof of the down payment may include photos documenting completed construction stages or (less commonly) invoices and receipts for materials and labor paid from your own funds.
When should the down payment be paid?
The first part of the down payment is typically paid at the stage of the preliminary agreement with the seller, usually in the form of a deposit (pl: zaliczka) or advance payment (pl: zadatek).
As for the remaining amount, the process depends on the agreement with the seller.
On the secondary market, the remaining portion of the down payment is most often paid shortly before or at the notary, while signing the deed transferring property ownership.
On the primary market, when the property is still under construction, the remaining part of the down payment is transferred to the developer’s escrow account before the bank starts disbursing the mortgage tranches. Some banks offer mixed financing, where your payments alternate with the bank’s loan disbursements. If the property has already been completed, the down payment is paid in the same way as on the secondary market, usually just before signing the final notarial deed.
Summary
You now know what a down payment is, how to calculate it and where and when it should be paid. I hope this article has clarified any doubts on the topic. If you still have questions about the down payment or mortgages in general, feel free to ask them in the comments below or contact us directly — we will do our best to help.