Cash Needed at Closing: The Breakdown

I often get asked what’s included in borrowers funds needed at closing. They ask:

Does that include my down payment or is that just my closing costs?

Is my credit from the seller included?

So I thought I would take some time to break down a very basic understanding of the cash needed at closing. When you first meet with your loan officer you should get an estimate of what you might need to bring to the closing. Due to several unknown costs at the beginning this is just an estimate however a highly skilled and seasoned loan officer will be able to make it as close as possible. Upon getting a clear to close from your loan officer following the processing of the loan, you will get a final closing disclosure.

On the final closing disclosure which you will receive via email for your acknowledgement, will outline all of the costs and their breakdown for your review. On the bottom of the first page it shows how much cash is needed from the borrower at closing. Where does that number come from? I have outlined below what all goes into that final cash to close number.

Bank Charged Closing Cost—each banks closing costs differ based on the their appraisal and processing costs.

Title Charges—the title company will charge document prep fees, title search fees, owner and lender title insurance and other processing fees.

The Down Payment—the amount of money you are putting down on the purchase of the home is included in this final number.

There are often credits the buyer will get towards those costs. These credits are then deducted from the total of the above closing costs and down payment.

Seller Paid Closing Costs—in central Ohio it is customary for the seller to provide a closing cost credit to the buyer. In today’s’ hot real estate market this is being seen less due to the competitive nature of the many buyers offers.

Lender Credits—many times the lender will provide a credit to the buyer for taking a slightly higher rate to help offset some of the costs needed at closing.

Tax Proration—because the buyer hasn’t lived in the house for the entire year they shouldn’t be obligated the cover the entire tax bill so they will get a credit from the seller for a prorated portion of the real estate tax bill for the year.

Title Insurance—in central Ohio it is customary for the seller to pay for both the lenders and the owner’s title insurance policies. This isn’t true everywhere, for example, in Cincinnati the buyer is responsible for this cost therefore it would go in the section above. I would imagine there are many parts of the country where this is true as well.

Now we know what is included in the cash needed at closing. There are several things to add up and then subtract out to get the final number. The above are general rules to understand about the cash needed at closing but may not be indicative of your personal situation. Because all real estate transactions are different and may carry differing credits and costs. However this outline is to be used a guide for better client understanding.


Zach is a Mortgage Advisor with State Bank in Dublin, OH. He writes and speaks regularly on the mortgage industry, personal finance, business development, and leadership. His focused approach on educating clients through the mortgage process allows him to help hundreds of new homeowners each year.

Learn more about Zach at, find him on instagram @mortgagecoachzach, or call/text him at 740-398-4917.

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