Saving for a down payment is only part of the plan. Buyers also pay closing costs, the fees and prepaid items needed to finalize a mortgage and transfer ownership. For many buyers they land somewhere around 2% to 5% of the purchase price, so on a $300,000 home, plan for roughly $6,000 to $15,000. Your actual amount depends on your loan, your lender, and your state.
What Closing Costs Include
- Lender fees: origination or underwriting fees and any discount points you choose to buy.
- Third-party services: appraisal, credit report, survey, and inspections.
- Title and settlement: title search, lender's title insurance, and escrow or closing fees.
- Government fees: recording fees and, in some states, transfer taxes.
- Prepaids: your first year of homeowners insurance and daily interest through the end of the month.
- Initial escrow deposits: a cushion of property taxes and insurance for your escrow account.
How to Estimate Your Cash to Close
Cash to close = Down payment + Closing costs − Credits
Credits can include your earnest money deposit, seller concessions, and lender credits. The result is the amount you'll wire or bring as certified funds.
Two Documents to Watch
After you apply, your lender must send a Loan Estimate within three business days. Compare Loan Estimates from more than one lender. Before closing, you'll receive a Closing Disclosure at least three business days in advance. Compare it line by line with your Loan Estimate and ask about anything that changed.
Ways to Lower What You Bring to Closing
- Negotiate seller concessions in your offer.
- Shop lenders and compare fees, not just interest rates.
- Ask about down payment assistance programs in your area.
- Consider closing near the end of the month to reduce prepaid interest. Your payment amount doesn't change; it only shifts timing.
Plan for the monthly payment after closing
Cash to close is the upfront amount; your mortgage schedule tracks repayment over time. Our mortgage amortization guide with extra-payment examples explains the principal-and-interest breakdown. To model your own assumptions, view the downloadable mortgage payoff calculator.
Plan Your Numbers
The Closing Cost Estimator helps you estimate closing costs and cash to close, and the Down Payment & Savings Planner shows how long it may take to get there. Touring homes? Keep them straight with the free Home Comparison Dashboard. Explore all Homebuyer Tools.
Written by Marchelle Cook, a Realtor for 26 years and a real estate investor and property manager since 2012. This article is for educational purposes only and is not financial or legal advice. Your lender and title company will provide your official figures.
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