The down payment is not the whole cheque
Add closing costs.
All tracks and lessons
Closing costs and hidden purchase fees
Budget roughly 2–5% of the price on top of the down payment, and compare the Loan Estimate line by line.
In this lesson you will
- Estimate closing costs
- Use the Loan Estimate and Closing Disclosure
- Avoid closing wire fraud
Closing costs are the fees and prepaid items paid when a home purchase is finalised. They commonly run around 2% to 5% of the purchase price, on top of the down payment.
What they include
- Lender fees: origination, underwriting, points.
- Third-party fees: appraisal, title insurance, inspections, recording.
- Prepaids: initial escrow for taxes and insurance, prepaid interest.
Two key documents
Lenders must give you a Loan Estimate after you apply, and a Closing Disclosure at least three business days before closing (CFPB). Compare them line by line and ask about any change.
Shop where you can
Some services, such as title insurance or settlement, may be shopped. Compare Loan Estimates from more than one lender — the rate and the fees together.
Cash to close
Your cash to close is the down payment plus closing costs, minus credits. Confirm wiring instructions by phone with a number you trust — closing is a common target for wire fraud.
By the GetGuac team · Editorial policy
Three ideas to keep
Compare the paperwork
Estimate versus disclosure.
Verify wire instructions
By phone, every time.
Do it in 4 steps
Estimate 2–5% of the price
For budgeting.
Get two or three Loan Estimates
Compare fees and rate.
Review the Closing Disclosure
Three business days before.
Confirm wiring by phone
With a trusted number.
Cash needed to close
Illustrative $300,000 purchase, 10% down, 3% closing costs, $2,000 seller credit.
| Item | Amount |
|---|---|
| Down payment (10%) | $30,000 |
| Closing costs (3%) | $9,000 |
| Seller credit | −$2,000 |
| Cash to close | $37,000 |
Budgeting only for the $30,000 down payment would have left a $7,000 gap.
Where this usually goes wrong
- Budgeting only the down payment
- Not comparing lenders’ fees
- Wiring money from emailed instructions without checking
Multiply a home price you are considering by 3% to estimate closing costs.
Tools and guides for this lesson
Quick quiz
1. Closing costs commonly run about…
2. When must you receive the Closing Disclosure?
3. Before wiring money to close you should…
0 of 3 answered
Puzzle
A $250,000 home with 5% down and 4% closing costs. What is the cash to close with no credits?
Show the answer
$22,500
Down: $12,500. Closing: $10,000. Total $22,500.