First home cash to close: down payment, closing costs, monthly payment, and reserves

How much cash do I need to close on a first home, and what is left after?

Cash to close on a first home, and what is left after

Enter a price, loan, and closing costs. The lab itemizes the cash due at closing, the monthly payment with taxes and insurance, and the savings that remain. The values shown are samples.

The home and the loan

Home price*

Loan type

Down payment (% of price)*

Interest rate (%)*

Loan term

Discount points (1 point is 1% of the loan)

Closing day and the monthly bill

Closing costs (% of price)

Lender, title, appraisal and recording fees. Your Loan Estimate lists them.

Prepaid escrow (months of tax and insurance)

The lender collects these at closing to start the escrow account.

Property tax (% of price, a year)

Your county's rate. It is not looked up from the state.

Homeowners insurance (a year)

Cash you have saved for this purchase

State

Used for the link to HUD's page of homebuying help and housing counselors for your state.

$57,667

of cash is due at closing on a $400,000 home: $40,000 down, $12,000 in closing costs, $3,600 in points and $2,067 of prepaid escrow, in this sample.

This week: ask a lender for a Loan Estimate and compare its cash to close with this number.

Where the closing cash goes

Down payment$40,00069%
Closing costs$12,00021%
Points$3,6006%
Prepaid escrow$2,0674%

Down payment: $40,000
Closing costs: $12,000
Points: $3,600
Prepaid escrow: $2,067
Cash to close: $57,667

Principal and interest: $2,275.44
Property tax: $366.67
Homeowners insurance: $150.00
Monthly PITI: $2,792.11
Mortgage insurance (PMI, estimate): $165.00
Monthly total: $2,957.11

Reserves left

$22,333 after closing, about 7.6 months of the full payment.

Notes on this estimate

PMI is an estimate of 0.55% a year. Insurers price it by credit score and down payment, and your Loan Estimate has the real figure. PMI can be canceled on request at 80% of the original value and ends at 78%.
For help in Texas, see HUD homebuying resources for Texas, which lists housing counselors.

Educational estimate, not a Loan Estimate. What it simplifies: closing costs are one percent of price, points are 1% of the base loan each, the FHA upfront premium and the VA funding fee are financed into the loan, the FHA annual premium is the first-year figure on the base loan, property tax and insurance are the numbers you enter rather than looked up by state, and VA terms assume first use with no exemption. Conventional PMI is an estimate because no public price table exists. Official figures: FHA premiums from HUD Mortgagee Letter 2023-05, VA funding fee, and the 2026 baseline conforming limit of $832,750. HUD ML 2023-05 · VA funding fee · FHFA 2026 loan limits · CFPB: FHA loans · CFPB: removing PMI · Fannie Mae HomeReady

How this calculator works

Cash to close is the down payment, closing costs, discount points, and the prepaid escrow the lender collects to start your tax and insurance account. The lab itemizes each one so the total matches the line items on a Loan Estimate.
Mortgage insurance protects the lender. An FHA loan charges an upfront premium of 1.75% of the base loan, which the lab adds to the loan, and an annual premium that HUD sets by term, loan size, and loan-to-value. A VA loan charges a one-time funding fee, 2.15% with no down payment for a first use, 1.5% at 5% down, and 1.25% at 10% down, also added to the loan, and no monthly insurance.
Conventional loans with less than 20% down carry private mortgage insurance (PMI). No public price table exists for it, so the lab shows an estimate by down payment and labels it that way. Your lender's Loan Estimate has the real number. PMI can be canceled on request at 80% of the original value and ends at 78%.
Monthly PITI is principal and interest, property tax, and homeowners insurance. The lab adds mortgage insurance on top and then shows the savings left after closing, in dollars and in months of the full payment.
The 2026 baseline conforming loan limit is $832,750 for one-unit homes. A base loan above it is flagged, because higher-cost counties have higher limits and a jumbo loan has different terms.

A $400,000 home, 10% down, 6.5% for 30 years

The down payment is $40,000 and the loan is $360,000. Closing costs at 3% are $12,000, one point is $3,600, and four months of prepaid escrow on $4,400 of tax and $1,800 of insurance is $2,066.67. Cash to close is $57,666.67. Principal and interest are $2,275.44, tax is $366.67 and insurance is $150, so PITI is $2,792.11. At 90% loan-to-value the lab's PMI estimate is 0.55% a year, $165.00 a month, for a total of $2,957.11. With $80,000 saved, $22,333.33 is left, about 7.6 months of the full payment.

What this assumes

Closing costs are a single percent of price. A Loan Estimate lists the real ones, which vary by lender, title company, and state.
Property tax and insurance are the numbers you enter. The lab does not look them up by state or county.
The FHA upfront premium and VA funding fee are financed into the loan. VA terms assume a first use with no exemption.
The FHA annual premium is the first-year figure, on the base loan. HUD recalculates it each year on the balance.
Conventional PMI is an estimate. It depends on credit score, which the lab does not ask for.
No seller credits, no transfer taxes, and no down payment assistance are modeled.

Finance Quest is educational. It is not financial advice, and no calculator here knows your full situation.

The mistake: saving only the down payment

In the example the down payment is $40,000 and cash to close is $57,666.67, which is $17,666.67 more. Closing costs, points, and prepaid escrow come out of the same savings, and nothing in the account is left for a repair or a lost paycheck. The reserves line shows how many months of the payment remain after closing.

Common questions

How much cash do I need to buy a first home?

The down payment plus closing costs, points, and prepaid escrow. The lab itemizes each. A lender's Loan Estimate shows the total as cash to close, and the Closing Disclosure shows the final figure.

What is the minimum down payment?

FHA allows as little as 3.5%, conventional programs such as Fannie Mae's HomeReady allow 3%, and VA loans need none for eligible borrowers. A lower down payment means mortgage insurance or a funding fee and a larger loan.

When does PMI go away?

On request when the balance is scheduled to reach 80% of the original value, and automatically at 78%, if you are current on payments. FHA premiums run 11 years at 90% loan-to-value or less and for the life of the loan above that.

What are prepaid escrow items?

Money the lender collects at closing to start the account that pays your property tax and homeowners insurance. The lab uses the number of months you enter, since lenders ask for different amounts.

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