In short: a down payment is the part of the price of a home or item that you pay with your own money, while the rest is financed with a loan.
Simply put: the larger it is, the smaller the principal and the total interest. But a savings buffer must remain afterwards — a home without a buffer is the most common source of stress. Purchase costs (fees, taxes, valuation) come on top.
Example: a home for €150,000. If the loan may be at most 85 % of the value, it is up to €127,500, and the down payment is at least €22,500, plus purchase costs.
Watch out: do not put your whole emergency fund into the down payment.
The EU rule: EU law does not set a single figure. In many countries the central bank or macroprudential authority sets limits on loan-to-value (LTV), debt-service-to-income (DSTI) and term; these measures are national.
Example: Bulgaria — from 1.10.2024 the BNB requires that a housing loan does not exceed 85 % of the property value, debt payments 50 % of monthly income, and the term 30 years (with a limited exception). Within these limits each bank sets its own down payment.
Check in your country — Look on your central bank's website under "macroprudential policy" or "borrower-based measures".
Source: ESRB — national borrower-based measures: https://www.esrb.europa.eu/national_policy/other/html/index.en.html; BNB press release of 11.09.2024: https://bnb.bg/AboutUs/PressOffice/POPressReleases/POPRDate/PR_20240911_1_EN