diff --git a/README.md b/README.md
index 7c496bf..eca18f8 100644
--- a/README.md
+++ b/README.md
@@ -27,27 +27,27 @@ Download the latest release from [releases](https://github.com/darkzoul5/Youtube
 
 ## Configure
 
-On first run, the app will auto-create a default `yt-playlist-config.json` in the project root (if missing).
+On first run, the app will auto-create a default `config/yt-playlist-config.json` (if missing).
 
-Create/edit `yt-playlist-config.json`:
+Create/edit `config/yt-playlist-config.json`:
 
 ```json
 {
-  "config_path": "./",
   "ffmpeg_path": "./bin/ffmpeg.exe",
   "playlists": [
     {
       "url": "https://www.youtube.com/playlist?list=YOUR_PLAYLIST_ID",
       "download_mode": "audio",
+      "max_download_quality": "1080p",
       "save_path": "./downloads"
     }
   ]
 }
 ```
 
-`config_path` (optional):
+`max_download_quality`:
 
-- If set to a string path, the app loads the config from that file instead (path is relative to the current config file).
+- Limits yt-dlp download quality (e.g. `"1080p"`, `"720p"`). This only affects the downloaded video format selection.
 
 `download_mode`:
 
diff --git a/config/yt-playlist-config.example.json b/config/yt-playlist-config.example.json
index 7059006..61e1d76 100644
--- a/config/yt-playlist-config.example.json
+++ b/config/yt-playlist-config.example.json
@@ -3,7 +3,7 @@
     {
       "url": "https://www.youtube.com/playlist?list=YOUR_PLAYLIST_ID_HERE",
       "download_mode": "audio",
-      "max_video_quality": "1080p",
+      "max_download_quality": "1080p",
       "save_path": "./downloads"
     }
   ],
diff --git a/src/app/config/settings.py b/src/app/config/settings.py
index 20c0925..d28bac0 100644
--- a/src/app/config/settings.py
+++ b/src/app/config/settings.py
@@ -8,30 +8,52 @@ from typing import Any, Dict, List, Optional
 DEFAULT_CONFIG: Dict[str, Any] = {
     "playlists": [],
     "download_mode": "audio",
-    "max_video_quality": "1080p",
+    "max_download_quality": "1080p",
     "save_path": "./downloads",
     "ffmpeg_path": "ffmpeg",
 }
 
 
 class Settings:
-    def __init__(self, config_path: Optional[Path] = None) -> None:
+    def __init__(self) -> None:
         base_dir = Path("config")
         base_dir.mkdir(parents=True, exist_ok=True)
-        self.path = (config_path or (base_dir / "yt-playlist-config.json")).resolve()
+        self.path = (base_dir / "yt-playlist-config.json").resolve()
         self.data: Dict[str, Any] = dict(DEFAULT_CONFIG)
-        if self.path.exists():
-            try:
-                self.data.update(json.loads(self.path.read_text(encoding="utf-8")))
-            except Exception:
-                # Leave defaults if invalid JSON; validation can be added later.
-                pass
+
+        # Ensure there is always a config file at the default path.
+        if not self.path.exists():
+            self._write_default_config(self.path)
+
+        self._load_from_path(self.path)
+
+    def _load_from_path(self, path: Path) -> None:
+        try:
+            self.data.update(json.loads(path.read_text(encoding="utf-8")))
+        except Exception:
+            # Leave defaults if invalid JSON; validation can be added later.
+            pass
+
+    def _write_default_config(self, path: Path) -> None:
+        path.parent.mkdir(parents=True, exist_ok=True)
+        default_payload: Dict[str, Any] = {
+            "playlists": [
+                {
+                    "url": "https://www.youtube.com/playlist?list=YOUR_PLAYLIST_ID",
+                    "download_mode": "audio",
+                    "max_download_quality": "1080p",
+                    "save_path": "./downloads",
+                }
+            ],
+            "ffmpeg_path": "ffmpeg",
+        }
+        path.write_text(json.dumps(default_payload, indent=2) + "\n", encoding="utf-8")
 
     @property
     def playlists(self) -> List[Dict[str, Any]]:
         global_defaults = {
             "download_mode": self.data.get("download_mode", DEFAULT_CONFIG["download_mode"]),
-            "max_video_quality": self.data.get("max_video_quality", DEFAULT_CONFIG["max_video_quality"]),
+            "max_download_quality": self.data.get("max_download_quality", DEFAULT_CONFIG["max_download_quality"]),
             "save_path": self.data.get("save_path", DEFAULT_CONFIG["save_path"]),
             "ffmpeg_path": self.data.get("ffmpeg_path", DEFAULT_CONFIG["ffmpeg_path"]),
         }
diff --git a/src/app/core/download/downloader.py b/src/app/core/download/downloader.py
index a422586..cc6d834 100644
--- a/src/app/core/download/downloader.py
+++ b/src/app/core/download/downloader.py
@@ -15,6 +15,30 @@ class Downloader:
         self.yt_dlp_path = yt_dlp_path
         self.ffmpeg_path = ffmpeg_path
 
+    @staticmethod
+    def build_format(max_download_quality) -> str:
+        def parse_height_cap(value) -> int | None:
+            if value is None:
+                return None
+            if isinstance(value, int):
+                return value if value > 0 else None
+            s = str(value).strip().lower()
+            if not s or s in {"best", "max", "auto", "none", "null"}:
+                return None
+            digits = "".join(ch for ch in s if ch.isdigit())
+            if not digits:
+                return None
+            try:
+                cap = int(digits)
+            except Exception:
+                return None
+            return cap if cap > 0 else None
+
+        cap = parse_height_cap(max_download_quality)
+        if cap is not None:
+            return f"best[ext=mp4][acodec!=none][vcodec!=none][height<={cap}]/best[ext=mp4][height<={cap}]/best[ext=mp4]"
+        return "best[ext=mp4][acodec!=none][vcodec!=none]/best[ext=mp4]"
+
     async def handle_job(self, job: DownloadJob):
         try:
             job.state = JobState.DOWNLOADING
@@ -53,12 +77,14 @@ class Downloader:
 
             outtmpl = str(job.output_path)
 
+            fmt = self.build_format(getattr(job, "max_download_quality", None))
+
             # All modes download a single muxed mp4 when possible.
             # This avoids any ffmpeg-driven merging during the download step, satisfying:
             #   - video: "original file, no processing"
             #   - audio/both: extraction is done separately after download
             ydl_opts = {
-                "format": "best[ext=mp4][acodec!=none][vcodec!=none]/best[ext=mp4]",
+                "format": fmt,
                 "outtmpl": outtmpl,
                 "noplaylist": True,
                 "quiet": True,
diff --git a/src/app/core/download/queue_manager.py b/src/app/core/download/queue_manager.py
index da83cd1..eaf9148 100644
--- a/src/app/core/download/queue_manager.py
+++ b/src/app/core/download/queue_manager.py
@@ -28,6 +28,7 @@ class DownloadJob:
     state: JobState = JobState.QUEUED
     error: Optional[str] = None
     ffmpeg_path: Optional[str] = None
+    max_download_quality: Optional[str] = None
     audio_output_path: Optional[Path] = None  # when mode=video and we also want mp3
     keep_video: bool = True
 
diff --git a/src/app/core/sync/executor.py b/src/app/core/sync/executor.py
index b0d4f0b..dcebb1d 100644
--- a/src/app/core/sync/executor.py
+++ b/src/app/core/sync/executor.py
@@ -152,6 +152,7 @@ class ActionExecutor:
                     d["video"] = a.to_name
 
             ffmpeg_cfg = str(playlist_cfg.get("ffmpeg_path", "ffmpeg")) if playlist_cfg.get("ffmpeg_path") is not None else None
+            max_quality_cfg = playlist_cfg.get("max_download_quality")
             temp_video_root = video_root / ".tmp"
             temp_video_root.mkdir(parents=True, exist_ok=True)
 
@@ -176,6 +177,7 @@ class ActionExecutor:
                             url=url,
                             mode="video",
                             ffmpeg_path=ffmpeg_cfg,
+                            max_download_quality=max_quality_cfg,
                             audio_output_path=audio_path,
                         )
                         jobs.append(job)
@@ -200,6 +202,7 @@ class ActionExecutor:
                         url=url,
                         mode="video",
                         ffmpeg_path=ffmpeg_cfg,
+                        max_download_quality=max_quality_cfg,
                         audio_output_path=audio_path,
                         keep_video=False,
                     )
@@ -215,6 +218,7 @@ class ActionExecutor:
                         url=url,
                         mode="video",
                         ffmpeg_path=ffmpeg_cfg,
+                        max_download_quality=max_quality_cfg,
                     )
                     jobs.append(job)
                     await queue.enqueue(job)
diff --git a/tests/dummy_config.py b/tests/dummy_config.py
index eeaf3f7..33913ed 100644
--- a/tests/dummy_config.py
+++ b/tests/dummy_config.py
@@ -12,7 +12,7 @@ class DummyConfig:
     max_parallel_downloads = int(os.getenv("TEST_MAX_PARALLEL", "2"))
     aria2c_connections = int(os.getenv("TEST_ARIA2C_CONN", "2"))
     download_mode = os.getenv("TEST_DOWNLOAD_MODE", "audio")
-    max_video_quality = os.getenv("TEST_MAX_VIDEO_QUALITY", "1080p")
+    max_download_quality = os.getenv("TEST_MAX_DOWNLOAD_QUALITY", "1080p")
     # runtime flags
     debug = False
     non_interactive = False
diff --git a/tests/test_download_quality_format.py b/tests/test_download_quality_format.py
new file mode 100644
index 0000000..ff75018
--- /dev/null
+++ b/tests/test_download_quality_format.py
@@ -0,0 +1,15 @@
+from __future__ import annotations
+
+from src.app.core.download.downloader import Downloader
+
+
+def test_build_format_defaults_to_best_mp4():
+    fmt = Downloader.build_format(None)
+    assert "height<=" not in fmt
+    assert "best[ext=mp4]" in fmt
+
+
+def test_build_format_applies_height_cap():
+    fmt = Downloader.build_format("720p")
+    assert "height<=720" in fmt
+
diff --git a/tests/test_settings_default_config.py b/tests/test_settings_default_config.py
new file mode 100644
index 0000000..1a2f25a
--- /dev/null
+++ b/tests/test_settings_default_config.py
@@ -0,0 +1,32 @@
+from __future__ import annotations
+
+import json
+from pathlib import Path
+
+from src.app.config.settings import Settings
+
+
+def test_settings_creates_root_config_if_missing(tmp_path, monkeypatch):
+    monkeypatch.chdir(tmp_path)
+
+    cfg_path = tmp_path / "config" / "yt-playlist-config.json"
+    assert not cfg_path.exists()
+
+    settings = Settings()
+    assert settings.path == cfg_path.resolve()
+    assert cfg_path.exists()
+
+    data = json.loads(cfg_path.read_text(encoding="utf-8"))
+    assert "playlists" in data
+
+
+def test_settings_reads_config_from_default_location(tmp_path, monkeypatch):
+    monkeypatch.chdir(tmp_path)
+
+    cfg_path = tmp_path / "config" / "yt-playlist-config.json"
+    cfg_path.parent.mkdir(parents=True, exist_ok=True)
+    cfg_path.write_text(json.dumps({"playlists": [{"url": "X", "save_path": "./downloads"}]}), encoding="utf-8")
+
+    settings = Settings()
+    assert settings.path == cfg_path.resolve()
+    assert settings.playlists and settings.playlists[0]["url"] == "X"