Cash to close is not just the down payment
The number that must be wired on closing day is the down payment plus closing costs minus any credits. On a $420,000 purchase with 20% down, that is $84,000 plus roughly $10,000–$18,000 — a difference large enough to sink a transaction if it is discovered late.
The four buckets
- Lender fees. Origination, underwriting, processing, and optional discount points. Negotiable in practice, especially if you have competing Loan Estimates.
- Third-party services. Appraisal, credit report, flood certification, survey, pest inspection.
- Title and government. Lender's title insurance (required), owner's title policy (optional but usually wise), settlement agent fee, recording fees and transfer taxes.
- Prepaids and escrow. A full year of homeowners insurance up front, plus two to three months of tax and insurance held in reserve, plus interest from closing to the end of the month.
Use the Loan Estimate
Federal rules require every lender to issue a standardised Loan Estimate within three business days of your application, with fees in the same order on the same form. That makes side-by-side comparison possible for the first time in decades. Pay particular attention to section C — the services you are allowed to shop for — because that is where the largest avoidable spread hides.
Ways to lower the number
Ask the seller for a concession, particularly if the property has been listed a while. Shop title and settlement independently rather than accepting the default provider. Close near the end of the month to minimise prepaid interest. And check whether your state or city offers first-time buyer assistance — many fund several thousand dollars of closing costs and go unclaimed.
Watch the three-day rule
You must receive the Closing Disclosure at least three business days before closing. Compare it line by line against your Loan Estimate. Certain fees cannot increase at all, and others only within a 10% tolerance; anything outside that must be refunded. Errors are common and are usually corrected when pointed out.