What this calculator does
Cash to close is the amount you bring to the closing table: the down payment plus everything else due that day, minus money already paid or covered by someone else.
It is a different number from closing costs. Closing costs cover making the loan and transferring the home, and on the official forms they also include prepaid items and the opening deposit into your escrow account. Cash to close starts there, adds the down payment, then subtracts credits and the earnest money you put down with your offer.
Enter the figures from your Loan Estimate, or your own estimates if you do not have one yet. The calculator adds them up, shows what each group contributes and lists every line, so you can check the total against the forms your lender sends.
How the math works
- D
- down payment
- F
- fees and points: lender fees + points × loan amount + third-party services + recording fees and transfer taxes
- P
- prepaids: prepaid interest + the first year of homeowners insurance
- E
- initial escrow deposit: (annual tax + annual insurance) ÷ 12 × months collected
- K
- seller and lender credits, counted only up to F + P + E
- M
- earnest money already paid
Prepaid interest. Mortgage interest is paid in arrears, so at closing the lender collects interest from closing day through the end of that month:
- L
- loan amount
- r
- annual interest rate as a decimal (6% → 0.06)
- d
- days from closing through the last day of the month
Some lenders count a 360-day year, which raises the daily figure slightly. Your Loan Estimate shows the per-day amount and number of days it used.
Escrow deposit. An escrow account pays your property tax and insurance bills. At closing the lender collects enough that the account will not run short before the next bill comes due, plus a cushion. Federal rules generally cap the cushion at one-sixth of the year's estimated escrow payments. Since the deposit depends on your closing date and local billing schedules, you enter the number of months directly.
Where it appears on your Loan Estimate and Closing Disclosure
Both forms use the same layout. Loan Costs list origination charges and the services you can and cannot shop for. Other Costs list taxes and government fees, prepaids, the initial escrow payment and other items. Lender credits are subtracted to reach total closing costs. A short Calculating Cash to Close table then adds the down payment and subtracts your deposit, seller credits and other adjustments.
| This calculator | On the forms |
|---|---|
| Lender fees, discount points | Loan Costs: origination charges |
| Third-party services | Loan Costs: services you can or cannot shop for |
| Recording fees, transfer taxes | Other Costs: taxes and government fees |
| Prepaid interest, first-year insurance | Other Costs: prepaids |
| Escrow deposit | Other Costs: initial escrow payment |
| Down payment, earnest money, seller credit | Calculating Cash to Close |
Worked example
These figures are made up to show the arithmetic, not typical amounts. A $350,000 home with $35,000 down, a 6% rate, $1,200 in lender fees, 0.5 point, $2,800 in third-party services and $900 in recording fees and transfer taxes. Insurance is $1,500 a year, property tax $4,200 a year. Closing leaves 12 days in the month, the lender collects 3 months of escrow, the seller credits $2,000 and the earnest money was $7,000.
Worked example
- Loan: $350,000 − $35,000 = $315,000. Points: 0.5% × $315,000 = $1,575.00. Fees and points: $1,200 + $1,575.00 + $2,800 + $900 = $6,475.00.
- Prepaid interest: $315,000 × 0.06 ÷ 365 × 12 = $621.37. Add the $1,500 premium: prepaids = $2,121.37.
- Escrow: ($4,200 + $1,500) ÷ 12 = $475.00 a month × 3 = $1,425.00.
- Total due: $35,000 + $6,475.00 + $2,121.37 + $1,425.00 = $45,021.37. Subtract the $2,000 credit and $7,000 earnest money.
Cash to close: $36,021.37. Costs beyond the down payment come to $10,021.37.
Counted on a 360-day year, the same 12 days of interest would be $630.00 instead of $621.37. Closing later in the month shrinks prepaid interest; closing early in the month grows it.
Common mistakes
- Budgeting for closing costs alone. The down payment, prepaids and escrow deposit are due the same day. Plan around cash to close.
- Forgetting the earnest money. The deposit you made with your offer counts toward what you owe, so it is subtracted. Do not plan to pay it twice.
- Treating prepaids as negotiable fees. Prepaid interest, insurance and escrow are not charges for a service; they are interest, premiums and taxes you would owe anyway, collected up front. A loan with lower fees does not shrink them.
- Expecting excess credits back as cash. Credits generally only offset costs. A credit larger than your costs is usually reduced, not paid out.
- Wiring money on instructions from an email. Criminals send convincing fake messages with "updated" account details. Call your settlement agent at a number you know is genuine and confirm the instructions before sending anything.
Limits of this estimate
- Your number changes until the Closing Disclosure. The closing date moves prepaid interest and escrow, and title, settlement and insurance figures firm up late. Federal rules limit increases in some estimated charges, but not in prepaids or escrow.
- Prorations and adjustments, such as property tax or HOA dues split with the seller, are not included. They can add to or subtract from what you bring.
- Upfront mortgage insurance and government loan fees are not included. See the FHA MIP and VA funding fee calculators.
- Leave out anything you already paid, such as an appraisal or inspection. The Closing Disclosure lists those in a separate before-closing column.
- The calculator does not check program limits on seller credits or how financed costs are handled.
Frequently asked questions
Is cash to close the same as closing costs?
No. On the official forms, total closing costs are the loan and transfer charges plus prepaids and the escrow deposit, less any lender credit. Cash to close starts from that total, adds the down payment, and subtracts seller credits and the earnest money you already paid. It is the figure you actually bring.
Why do I pay interest before my first payment?
Mortgage interest is paid in arrears: each monthly payment covers the month before it. The interest from closing day to the end of that month is collected at closing instead, and the first regular payment is usually due on the first day of the month after next.
Why does homeowners insurance show up twice?
Lenders commonly require the first year's premium to be paid at closing, which appears under prepaids. The escrow deposit then adds a few months of insurance so the account can pay next year's renewal. They are separate amounts covering different periods.
Can seller or lender credits be more than my costs?
Usually the excess cannot be paid to you in cash. Credits generally offset closing costs, prepaids and escrow, and loan programs set their own limits on seller contributions. If credits would exceed your costs, the amounts are typically reduced before closing. Your lender can say how your loan treats them.
When will I know the final number?
Federal rules require you to receive the Closing Disclosure at least three business days before closing, and its Calculating Cash to Close table gives the amount. Small adjustments can still happen, so confirm the final figure with your settlement agent before moving money.
How do I send the money safely?
Follow your settlement agent's instructions, but verify them by phone first, using a number you already know is genuine, not one from the email that carried the instructions. Be suspicious of any message saying the wiring details have changed. A wire is very hard to reverse once sent.
Next steps: the mortgage payment calculator shows the monthly cost of the same loan. If you are paying discount points, the points break-even calculator shows how long they take to pay for themselves. For an FHA loan, the FHA MIP calculator adds the upfront premium.