<prompt> Human: Hoping for some advice. My wife and I just reached an agreement on a new house and are very excited. Were first time home buyers. We have about 40k for a down payment which is 10.Fortunatley, my loving parents have offered me an additional 10,000 which is so generous of them. I currently have an auto loan of about 8000 on which i pay 230 a month.Would this additional 10k be best utilized on upping our down payment? Or would it be better to pay off my auto loan, have an extra 230 a month for the house, and use the remaining 2000 for a small bump in the down payment?Thanks for your advice!EDIT: thank you all for your advice. To be clear we have agreed with the seller on price, but have only been preapproved and havent secured financing yet. I have a call with my lender tommorow and will check on the PMI and get his advice.My car loan is at 3.99.Thanks again!FINAL EDIT: Thank you all very much for your advice, varied as it was. I just got off the phone with my mortgage lender and have a much better feel for what to do. The advantages in down payments will only come into effect when increased by increments of 5 so we will stick with our original 10 down payment. I will keep the gift money as an emergency fund. We will need to either sublease or break our lease on a city apartment so im sure Ill require some cash there.Additionally because of all the detailed advice and stuff I learned here, i was able to negotiate a reduced PMI by about 20 and also got the lender to agree to waive almost 1000 in fees! Thanks reddit financial homies.  <response>: I was in the same situation at one time. I chose to pay off the car and just apply the money I was paying on the car to additional principle of the mortgage each month. This had the following benefits: My debt to income ratio was more favorable since the car payment I eliminated was greater than the slight savings I would get on the mortgage payment each month if I had put more down. This was important to me because I am currently buying rentals and I wanted to maximize the amount banks would loan me for these properties. By paying the extra principle each month in my case apprx. 400 a month I significantly reduced the length of my loan and quickly built equity. It depends on your loan terms, but if you make an extra mortgage payment each year you will generally knock off about 6 years of paymentsinterest on a 30 year mortgage. I find this better than just putting more down on the mortgage and having a lower payment but still paying interest for the full 30 year term. Not having the car payment is a huge psychological benefit. Also, if an emergency comes up I dont have to pay the extra principle and have spare money to address it. 