Showing You the Money
When you’re buying a home, one of the biggest questions is:
“How much cash will I need at closing — and what exactly is included in that number?”
In this guide, I’ll walk you through the math we use to calculate your total cash due at closing — and then we’ll break down each component in detail so you can see how it all adds up.
The Basic Equation
Let’s start with the core formula:
Purchase Price
➕ Loan Costs (fees, points, prepaid items)
➖ Credits (earnest money, seller concessions, lender credits, appraisals already paid for)
➖ Loan Amount
= Cash Due at Closing
It really is that simple — but each of those parts contains moving pieces, and that’s what we’ll break down next.
Fees
There are standard costs associated with closing your transaction.
Each of these fees is for a necessary service:
Underwriting and processing
Appraisal
Credit report
Title fees (insurance, doc prep, etc.)
Recording charges and taxes
✅ These are third-party costs required to close your transaction.
Discount Points
In some scenarios, you’ll see options with discount points — which means you’re paying extra upfront to secure a lower interest rate.
Sometimes it makes sense to pay discount points, and sometimes it doesn’t. Paying them is always your choice based on what makes sense for you.
Prepaids
Prepaids are costs associated with closing, but they are NOT transaction fees. They’re going toward:
Daily interest between closing and your first payment
Homeowner’s insurance
Your escrow account for property taxes and insurance
These are considered upfront payments, and part of your total cash due, but since you’re paying your own future expenses in advance we call them pre-paids instead of “fees”.
Credits
Any credits will go towards your costs, including:
Earnest money you already deposited with the title company
Seller concessions if they agreed to any
Appraisal credit at closing because you’ll pay for that upfront when it’s ordered
These are subtracted directly from total settlement costs.
Loan Amount
After we applly credits, we subtract the loan amount — which leaves the cash due at closing as the final result.
Final Summary
Purchase Price
+ Fees
+ Pre-Paids
+ Discount Points
= Total Settlement Costs
- Credits
- Loan Amount
= Cash due at closing
Our Loan Options Presentation will show exactly what these numbers are, and how they come together.