We've all heard horror stories where someone gives a contractor a $5,000 down payment, and then never hears from them again.

That down payment is an important part of any home improvement project -- too important to mess up. Most contractors will ask for a down payment before the job begins, and down payments for home improvement projects are common.

"Down payments for home improvement projects are normal, but keep in mind you don't have to pay what the contractor initially requests. Everything is negotiable,” says Angie Hicks, founder of Angie's List.

But any contractor who insists on a big down payment or complete payment upfront should raise a red flag.

Hicks has advice on how to gauge how much to give the contractor for a down payment, "Unless you have custom materials, your contractor shouldn't require the full cost of materials in order to start the project. Tie all future payments to progress, and hold back final payment until you're completely satisfied with the job."

And hold back at least 10 percent until the job is completed.

Before you make your final payment, do a final walk-thru of the project and make sure everything on the punch list has been completed to your satisfaction.

If the project isn't fully finished, set a completion date for that portion of the project and don't make the final payment until you're happy with the work.

The last thing you want is for a two-week project to go on for two months while those little things remain undone.

And remember to get it in writing. Have all details requiring payment terms included in a written contract and make sure you read and understand the contract before signing.

And never pay for a project with cash; always use a credit card so you have recourse in case something goes wrong.

Many contractors are willing to work with homeowners to establish payment schedules, based on targeted completion dates.