• Closing costs: Cash to close includes all of the money you’ll need to bring with you on the closing day, including your closing costs.
• Down payment: Your down payment is the percentage of the purchase price that you’ll be paying upfront. The down payment usually represents the largest portion of the cash to close. In most cases, it can be as low as 3%, with some people putting down up to 20%. Certain government loans like VA and USDA loans don’t require a down payment at all.
• Mortgage points: Points are fees paid to the lender to “buy down” the interest rate on a mortgage. One point generally lowers your interest rate by 0.25% and costs 1% of the price of the home. The cost of any mortgage points is also included in your cash to close.
• Credits: Lender credits are similar to mortgage points, but work the opposite way. Lender credits allow you to reduce your closing costs in exchange for a higher interest rate. If you receive lender credits, they’ll be reduced from your total cash to close.
• Earnest money: When you make an offer on a home, your real estate agent may encourage you to offer earnest money as a way to show the seller you’re serious. The earnest money is paid upfront and usually goes into an escrow account until the closing. If you’ve paid earnest money, it will be subtracted from what you owe on the closing day.

How Cash to Close is Calculated

“Cash to close is calculated by adding the amount the buyer is putting down plus the total of all the fees mentioned above (minus any lender or seller credits),” Messenger said. “For easy math, if a buyer is purchasing a home for $250,000, putting $25,000 down, and closing costs are $5,000, then their cash to close is $30,000.”

You can find your cash to close in your Closing Disclosure, which is a five-page form that provides all details of your mortgage loan.

Pro Tip

Before your home closing, be sure to read through your Closing Disclosure to make sure you fully understand how much you’ll have to bring with you on the closing day.

The amount of your costs to close can vary quite a bit depending on the size of your down payment. Closing costs generally range from 3% to 5% of the loan amount, while down payments often start at 3% and go up to 20%, with the median being 6.6%.

The payment method you can use for your cost to close may depend on where you live and the title company you use. Often the only payment methods allowed are certified checks and wire transfers. In other cases, you may also be able to use cash, debit card, a cashier’s check, or even a personal check.

“Wire transfers are one of the safer options when it comes to paying your mortgage,” Auerswald said. “It’s transferred electronically from one bank to another or from one account to another. Wire transfers also don’t require your presence, so you can be at work while the transaction takes place. Be careful to make sure you know exactly where you’re sending your money, however, since wire transfers are non-reversible.”

While certified checks and cashier’s checks have previously been the most common payment methods for cash to close, more title companies are now requiring wire transfers.

“Cash to close refers to what you pay to actually purchase the home,” said Cliff Auerswald, president of All Reverse Mortgage, Inc. “It includes the mortgage down payment and subtracts any credits you may have acquired during the home-buying process.”