Cash to Close: The Full Amount You Need on Closing Day
The full amount you actually need on closing day: your down payment plus closing costs. Rehab and reserves come on top of that, so budget for them separately.
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Cash to close is the exact amount you must wire on closing day. It is the down payment plus closing costs, less any deposits already paid and any credits from the seller or lender.
The formula
Cash to close = Down payment + closing costs - earnest money - seller/lender credits
An example
A US$150,000 purchase, 20% down, with US$6,450 of closing costs, US$2,000 earnest money already paid, and US$1,500 of seller-paid costs negotiated:
| Item | Amount |
|---|---|
| Down payment | US$30,000 |
| Closing costs | US$6,450 |
| Less earnest money | −US$2,000 |
| Less seller credit | −US$1,500 |
| Cash to close | US$32,950 |
Where the number comes from
You will see it on the Closing Disclosure, which a lender must provide at least three business days before closing. Compare it line by line against the Loan Estimate you got earlier. Fees that moved without explanation are worth questioning while there is still time.
Funds almost always have to arrive by wire, and often must be seasoned in your account. Money that landed last week from an unexplained source can hold up a closing.
Why it isn't your total cash requirement
This is the figure people under-budget, because cash to close deliberately excludes everything after closing day:
- Immediate repairs the inspection turned up
- Turnover costs if the property is vacant: paint, cleaning, letting fee
- Reserves. Lenders often require 2 – 6 months of payments, and you want them regardless.
- A CapEx reserve from day one
A property that drains your last dollar at closing is a property you cannot afford, because the first US$4,000 repair becomes a crisis rather than an expense. Plan on cash to close plus roughly six months of payments and a repair buffer.
Wire fraud
Closing wires are a standing target. Confirm wire instructions by phone, using a number you obtained independently. Never from the email containing the instructions. Fraudulent instructions sent from a compromised mailbox are a well-documented pattern, and the money is usually unrecoverable.
Related reading
How much cash do you need builds the full figure. For a cross-border purchase, how to buy US rental property from Canada covers currency and timing.
Longer reads on this
Related terms
Run the number on a real listing
The free calculator works out cash-on-cash return, cap rate and DSCR from a price and a rent.