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Your down payment covers part of the home’s price. Closing costs pay for financing and completing the purchase. Cash to close is the amount still due at settlement after deposits, credits and other adjustments. Plan these separately from the money you want to keep after you move in.

The 30-second answer

Three buckets. Three different jobs.

  1. Down payment

    $200,000

    Your share of a hypothetical $1,000,000 purchase with an $800,000 loan.

  2. Closing costs

    $20,000

    An invented total for this example, including fees, prepaids and initial escrow funding.

  3. Cash still due

    $185,000

    After a $30,000 deposit already paid and a separate $5,000 seller credit.

$200,000 + $20,000 − $30,000 − $5,000 = $185,000

Teaching example only. These are not typical Bay Area costs or a loan quote. Assumes no other adjustments or costs paid before closing; the $20,000 is before the seller credit.

Follow the cash: why the deposit is not charged twice

The buyer has already sent $30,000. Bringing another $185,000 makes $215,000 paid by the buyer in total. Together with the $5,000 seller credit, that covers the $200,000 down payment and $20,000 closing costs. The $800,000 loan funds the remaining purchase price.

Savings kept after closing are outside this calculation. If this hypothetical buyer wanted $40,000 left afterward, they would need $255,000 before paying the deposit: $215,000 for the transaction plus $40,000 retained. That reserve is a made-up planning choice, not a lender requirement.

Is the down payment the same as closing costs?

No. A down payment reduces the amount you borrow toward the purchase price. Closing costs do not perform that job: they cover items such as loan charges, title and settlement services, recording, and certain advance payments.

Twenty percent is an example, not a universal requirement. Eligibility, loan size, property and mortgage insurance affect available options. Ask a lender to compare the cash needed today with the monthly cost of each actual loan program.

What is inside closing costs?

Think of three groups: service charges, bills paid ahead, and money placed in the mortgage escrow account. The last two are easy to mistake for extra lender fees.

Open the three groups on your Loan Estimate
  • Loan and transaction services: origination charges or points, appraisal, title, settlement and recording charges. Who pays particular items depends on your contract and loan.
  • Prepaids: items such as interest for the relevant days and an insurance premium paid ahead. These pay actual expenses, rather than building your down payment.
  • Initial escrow funding: money set aside for future covered tax and insurance bills. It is separate from the fee charged by the escrow company that closes the purchase.
  • Some expenses may be paid before closing. Check whether each appears as paid before closing so you do not include it a second time in the final transfer.

How does the earnest-money deposit affect cash to close?

In a completed purchase, a deposit already paid is accounted for toward what you owe. It is not an additional down payment on top of the agreed down payment. The Closing Disclosure and settlement statement should show where it was credited.

Whether a deposit is refundable if the purchase fails is a different question. That depends on the contract, contingencies, timing and facts. Do not treat this cash example as a promise that a deposit can always be recovered.

Where do I find the amount I still need to bring?

Use the Loan Estimate for early planning and the Closing Disclosure for the final disclosed loan and closing figures. Compare the Cash to Close calculation with your deposit receipt and the settlement figures. Ask the lender and escrow officer to explain every material change.

A practical reconciliation before transferring funds

In the example above, changing the seller credit from $5,000 to $0 increases the buyer’s remaining amount from $185,000 to $190,000. It does not change the agreed $200,000 down payment. A tax proration, different closing date or charge already paid could change the total again.

Ask for a line-by-line explanation of credits, prorations, initial escrow funding and costs paid before closing. Confirm the actual amount and transfer instructions directly with the escrow office using a trusted phone number. Do not rely solely on a last-minute email.

Can a credit eliminate all of my upfront cash?

Do not assume so. Seller credits must fit the purchase agreement and the loan’s rules. Lender credits can offset eligible closing costs, often in exchange for a higher interest rate. Compare the monthly cost and how long you expect to keep the loan, not just the cash due today.

If a lender credit is already reflected in the closing-cost figure you are using, do not subtract it again. Ask the lender which costs a credit can cover and whether any unused portion would be lost.

What should a Bay Area buyer keep outside this calculation?

Keep a separate plan for moving, repairs, furnishings, utilities and emergencies. A loan program may also require documented reserves. The amount your household chooses to retain can be different from the minimum required for approval.

For a California purchase, also ask about supplemental property taxes and the new assessed value. A low tax bill from the seller is not your future budget. The mortgage-escrow guide below explains why these bills deserve a separate check.

  • Ask for cash-to-close estimates for each loan option you are comparing.
  • Label every amount: still due, already paid, credited, or retained after closing.
  • Recheck the plan when the price, loan, insurance quote or closing date changes.

What should I confirm for my own purchase?

Use this guide to organize a conversation with your lender and escrow officer. Their current documents and your contract control the transaction. This is general education, not individualized lending, legal or tax advice. Sources checked October 10, 2026.

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