What is a financial consequence of making a down payment?

Making a down payment typically reduces the total amount borrowed, which in turn lowers the risk that the borrower will default on the loan. When you put a significant amount of money down upfront, it demonstrates to lenders that you have a vested interest in the property and are less likely to walk away from the loan. This reduces the lender's risk and often results in more favorable loan terms.

When a borrower has made a down payment, they have more equity in the property from the outset, which can also lead to better management of the loan. Lenders generally perceive borrowers who make down payments as more responsible and financially stable, which can translate into a lower likelihood of default due to the borrower's stake in the investment.

In contrast, the other choices suggest outcomes that do not align with the usual effects of making a down payment. For instance, making a down payment decreases the amount borrowed rather than increasing it, and it does not typically lead to acquiring additional debt. Additionally, a down payment is likely to result in lower interest rates, not higher ones, due to the reduced risk for the lender.