How to Estimate Cash to Close Before You Make an Offer
Shopping for your first home? Build a cash-to-close budget, see how credits affect what you bring, and compare FHA and conventional estimates side by side.
You’ve found a few homes you like. You know roughly what you’d pay for one, but how much money would you actually need to bring to closing?
Start with your target purchase price and the down payment you’re considering. Then estimate closing fees, prepaid expenses, and any initial escrow deposit. An earnest money deposit that’s already been paid and will be credited at closing, or a seller or lender credit that applies to your purchase, can reduce what you still owe on closing day. CFPB guide to estimated cash to close
Build your budget before you count on a credit
Run your first estimate with zero seller credits. If you’re considering asking the seller to help cover closing costs, run a second scenario with that credit. The difference tells you how much of your plan depends on the seller agreeing.
For example, say your estimated cash to close is $18,000. If the seller agrees to a $3,000 credit that you can apply in full to eligible costs, your estimate drops to $15,000, assuming the purchase price and other costs stay the same. If you’re offered a lender credit, compare the monthly payment too. A lender credit can come with a higher interest rate. CFPB guide to closing costs and credits
Compare FHA and conventional at the same home price
Use the same purchase price and property assumptions for both options. Compare what you’d bring to closing and what you’d pay each month. A loan that requires less cash upfront can still have a higher monthly payment. As you narrow down your search, update your estimate with taxes and an insurance quote for the specific property.
Use PMF’s FHA vs. Conventional Cash to Close Calculator to run both scenarios side by side before you apply.