Saving for the down payment is a start. Before you make an offer, you also need to understand the total money required to finish the purchase.
Your down payment is the part of the purchase price you pay without financing it through your mortgage. Cash to close is what remains for you to bring to closing after the transaction’s costs, deposits, credits and adjustments are accounted for.
Three numbers to keep separate
| Number | What it tells you |
|---|---|
| Down payment | Your contribution toward the purchase price. |
| Closing costs | Charges associated with the loan and property transaction, separate from the down payment. |
| Cash to close | The remaining amount due from you at closing. |
Closing costs can involve the lender and third parties. Prepaid items and an initial escrow deposit can also affect the amount collected. The CFPB’s Closing Disclosure guide explains where these amounts appear.
Check the calculation before moving money
Ask the lender or closing agent to walk through the cash-to-close calculation with you. Find your deposit, any agreed seller contribution and other credits. Confirm that money you already paid has been accounted for. Do not subtract a credit twice or add prepaid items again when they are already included in the total.
Use the Loan Estimate while planning. Before closing, compare it with the Closing Disclosure and ask about changes. A quick online estimate is useful for a conversation; your transaction documents are what you need to reconcile.
Here are the questions worth asking:
- What is my current estimated cash to close?
- Which charges could still change, and why?
- Where is my deposit reflected?
- Which credits have actually been approved?
- What money will I need to keep available after closing?
That last question is a separate budget decision. Moving expenses, repairs and your emergency cushion should not disappear just because the closing funds are ready.
A credit can change the tradeoff
A lender credit can reduce the amount you pay upfront, often in exchange for a higher interest rate than the same loan without that credit. Compare the upfront amount and the ongoing cost together. Ask for the alternatives in writing. CFPB: lender credits and points.
Confirm how to pay
Ask your closing agent which payment method is required and when the funds must arrive. Do not assume a card, personal check or physical cash will be accepted.
Before wiring funds, verify the instructions using a trusted phone number you already have. An email with new instructions is not enough. If something changes at the last minute, pause and call. If you suspect a fraudulent transfer, contact your bank immediately. CFPB: mortgage closing scams.
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