02 What you need to know
What goes into your cash to close
Cash to close is the total amount you bring to the closing table. The down payment is the biggest piece, but not the only one.
Down payment
The part of the price you pay yourself. On a $900,000 home with 10% down, that’s $90,000.
Lender fees
Origination, underwriting and processing fees, plus any discount points you choose to pay to lower your rate.
Title and escrow
Your lender will require a lender’s title policy, which protects the lender against ownership problems. An owner’s policy protects you. In Southern California, who pays for the owner’s policy is often negotiated in the purchase contract. Escrow is the neutral third party that holds funds and documents until closing, and it charges a fee.
Appraisal
An independent estimate of the home’s value, ordered by the lender and usually paid by you.
Prepaids
- Prepaid interest: daily interest from your closing date to the end of that month.
- Homeowners insurance: typically the first 12 months of premium, paid upfront.
- Property taxes: depending on timing, some taxes may be due or prorated at closing.
Initial escrow (impound) deposit
If your lender collects taxes and insurance monthly through an impound account, you’ll fund a starting balance at closing.
Credits that reduce what you bring
Your earnest money deposit (EMD), the good-faith money you put into escrow after your offer is accepted, is credited back at closing. It reduces the cash still due, not the total cost. Seller credits can also cover some of your costs.
03 Real-world example
Example: cash to close on a $900,000 purchase
Here is an illustrative breakdown. These are round estimates, not quotes. Your Loan Estimate will show actual figures.
| Item | Illustrative amount |
|---|---|
| Down payment (10%) | $90,000.00 |
| Lender fees | $3,500.00 |
| Appraisal | $750.00 |
| Title (lender’s policy) and escrow fees | $4,500.00 |
| Prepaid interest ($144.25/day × 15 days) | $2,163.75 |
| Homeowners insurance (12 months) | $2,400.00 |
| Initial escrow deposit (taxes and insurance) | $3,100.00 |
| Total funds needed | $106,413.75 |
| Less earnest money deposit already paid (3%) | −$27,000.00 |
| Less seller credit | −$5,000.00 |
| Cash due at closing | $74,413.75 |
Assumptions: illustrative only. Hypothetical 6.5% rate used to calculate prepaid interest ($810,000 × 6.5% ÷ 365 = $144.25 per day), closing 15 days before month-end. Other figures are round estimates. Actual fees, taxes and insurance vary. Your Loan Estimate will show actual figures.
In this example, costs beyond the down payment add up to $16,413.75. The EMD and seller credit don’t make the home cheaper. They change when and how you pay.
04 What most people overlook
What buyers overlook about closing costs
- Reserves may be required too. Reserves are money left in your accounts after closing, often measured in months of payments. You don’t spend them at closing, but you may need to show them.
- Your closing date changes the number. Prepaid interest is calculated per day, so closing early or late in the month shifts it.
- Your EMD needs a paper trail. The lender will want to see where that money came from.
- Seller credits have limits. They can’t exceed your actual allowable costs, and programs cap them.
Federal rules help. You’ll get a Loan Estimate within three business days of applying, and a Closing Disclosure at least three business days before closing. Compare the two line by line.
Budget for the total funds needed, then subtract credits. Not the other way around.
05 How I’d approach it
How I’d estimate your cash to close
I want you to know your cash-to-close number before you write an offer, not two weeks before you sign.
I start with your price range and down payment, then run a full estimate in my Loan Estimate calculator, including prepaids and impounds.
Next, I check your asset statements so we know what’s available after closing for reserves, and that your EMD and down payment are documented.
Then I talk with you and your agent about whether asking for a seller credit makes sense for this offer. Finally, I check the monthly side with the payment calculator, so both numbers work.