Homes cost a lot. Most people don't have that much money saved.
So you pay part of the price yourself. That part is your down payment.
A bank (or another lender) pays the rest. That loan is your mortgage.
Then you pay the bank back a little every month, for many years.
Each payment has two parts:
- Principal: paying back the money you borrowed.
- Interest: the bank's fee for lending it to you. Think of it as rent for borrowing money.
The home is the bank's safety net. If you stop paying, the bank can sell the home to get its money back.