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Understand the money required before and at closing.
Follow how your down payment, closing costs, money already paid, and final cash to close fit together. Start with a short lesson, watch a fictional example, or download two free handouts.
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The short lesson
See the CFPB mortgage terms and Closing Disclosure explainer.
Prepaids and mortgage escrow have different jobs. Prepaids cover particular expenses or coverage periods. Initial escrow funding establishes money held for future covered bills; ongoing mortgage escrow contributions replenish that account when applicable. This mortgage escrow account is different from an account holding an earnest-money deposit. Read the CFPB escrow explanation and the Closing Disclosure cost details.
Costs, financing, payment timing, credits, and adjustments can change the amount still due. A change does not explain itself: compare the relevant figures and ask your lender or settlement professional about anything you cannot reconcile.
Moving expenses and savings you choose to keep after buying belong in your broader planning. They are not automatically part of cash to close.
Learn how an earlier deposit relates to purchase funding and the amount still due.
Follow the same fictional purchase visually, from money already paid to money still due.
Use a one-page example to discuss payment timing and avoid counting the deposit twice.
Separate paying an expense from funding an account for future covered bills.
Try early planning assumptions for purchase-related cash and separate moving and retained-savings amounts.
Educational estimates only; it cannot reproduce every adjustment on closing paperwork or determine loan approval.Explore a broader fictional cash-planning example with separately chosen moving expenses and retained savings.
Understand which document rows may explain a changed total and what to ask when they do not reconcile.
Locate document figures and collect questions for your lender or settlement professional.
Compare the Loan Estimate and Final columns on one standard buyer Closing Disclosure and keep any unexplained difference visible.
For its supported single-mortgage purchase only: Cash to Close must be nonnegative and Funds for Borrower explicitly $0 in both columns. It does not compare arbitrary estimates or uploaded documents, verify fees, or tell you what to send.A worked example · 6 minutes 25 seconds
Earnest Money vs. Down Payment vs. Cash to Close (Full $400K Example)
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The published captions, grouped by chapter. The video uses a fictional example and includes its original optional-toolkit mention.
Earnest money. Down payment. Closing costs. Cash to close. Are those four separate bills? No—and one example will show you how they fit. Some labels tell you what the money pays for. Others tell you when it’s paid. Let’s follow a fictional four-hundred-thousand-dollar purchase, from money already paid to what’s still due.
We’ll keep two questions separate: what does the purchase money cover, and how much remains unpaid? The down payment goes toward the home price. Closing costs cover upfront costs connected with the loan and the transaction. Earnest money is a deposit paid earlier under the purchase contract. When an applicable deposit is credited at closing, it helps fund the amount you already owe. Cash to close is the amount still due after applicable payments, credits, and adjustments.
Start with the home price: four hundred thousand dollars. Our fictional buyer chooses a five-percent down payment. That’s twenty thousand dollars toward the purchase price— not a fee on top of the price. Five percent is just the choice in this example, not a requirement or recommendation. For now, we’re identifying what that money covers. We haven’t yet worked out how much of the buyer’s purchase money was paid earlier.
Next, add twelve thousand dollars in sample all-in closing costs. That’s three percent of the home price, used only as a fictional planning assumption. Closing costs are separate from the down payment. They relate to getting the loan and completing the ownership transfer. Our all-in figure also includes modeled prepaids and initial escrow funding. Those are already inside the twelve thousand; don’t add them again. Twenty thousand plus twelve thousand gives us thirty-two thousand, before prior payments or credits. This is a subtotal—not yet the amount to bring to closing.
Now bring in the five thousand dollars this buyer already paid as earnest money. In this example, the full deposit is credited toward the completed purchase. We also assume zero seller credit and zero other adjustments. So, from the thirty-two-thousand-dollar subtotal, five thousand is already accounted for. About twenty-seven thousand remains due at closing. The deposit hasn’t made the purchase five thousand dollars cheaper. It means that portion was paid earlier. And we’re not assigning it exclusively to the down payment or to one particular closing-cost line.
Here’s the check: five thousand already paid, plus about twenty-seven thousand still due, equals thirty-two thousand in this fictional example. One purchase-related amount, paid at different times. This assumes the purchase closes and the deposit is credited. If a deal falls through, getting earnest money back depends on the contract, its conditions and deadlines, and what happened. It isn’t automatically refundable.
Here’s the mistake to avoid: subtracting the deposit twice. If your Loan Estimate or Closing Disclosure already accounts for earnest money, don’t take that cash-to-close number and subtract the same deposit again. Our example already counted the five thousand when it reached about twenty-seven thousand still due. There isn’t another five-thousand-dollar deduction waiting to happen. The useful question is: has this payment already been included in the calculation? Check that before changing any number.
On a standard purchase Loan Estimate, page one summarizes estimated cash to close. Page two shows the calculation, including a deposit entry. On a standard purchase Closing Disclosure, page one summarizes cash to close, and page three shows its calculation, including the deposit. Compare the deposit with your payment records. An estimated deposit on a Loan Estimate is not, by itself, proof you’ve paid it. If something looks missing or wrong, ask your lender and settlement professional to reconcile it and confirm what remains due. Don’t adjust the official amount yourself.
Real transactions can have credits and other adjustments that our simplified example leaves out. An applicable credit isn’t another payment you personally made earlier. Its treatment depends on the transaction and loan rules. That’s why this example teaches the relationship, not a universal cash-to-close formula. Your actual Closing Disclosure may differ. Ask: where is my deposit accounted for, which credits apply, and how do those entries lead to the remaining amount?
There’s one more distinction: cash to close isn’t your entire savings plan. Moving, setup costs, and savings you want to keep afterward sit outside this worked example. Money you retain is not all handed over at closing. The cushion you choose for planning also isn’t the same thing as any reserves your lender may require. Keep the purchase payment, other planned expenses, and money you want left afterward separate.
For the written explanation, start with the free guide linked below. Then use the free Cash Needed calculator at Home Buyers Path dot com to try your assumptions. It separates estimated money still due from a broader savings target. It can’t reproduce every adjustment on your closing paperwork or determine loan approval. If a deposit has already left your bank account, don’t deduct it again when planning from the balance you have today.
An optional paid Excel toolkit can help organize your assumptions and comparisons. Desktop Microsoft Excel is required and sold separately. The guide and calculator remain free. The key is simple: what does the money cover, what have you already paid, and what is still due? Keep those questions separate, and the four labels become much easier to follow.
Download, print, discuss
Follow payment timing in a simplified fictional $400,000 purchase and see why an included deposit is not subtracted twice.
1 page · PDF · US Letter, fits A4
Download free PDF Read the accessible web versionLocate ten reference figures on a standard buyer Closing Disclosure and prepare questions about anything unclear.
2 pages · PDF · US Letter, fits A4
Download free PDF Read the accessible web versionHandout A · Complete accessible web version
Earnest money paid earlier is not automatically an extra cost on top of everything due at closing. In this fictional completed purchase, the deposit is credited toward the buyer's purchase-related amount.
| Part of the example | Amount |
|---|---|
| Down payment - 5% | $20,000 |
| Sample all-in closing costs - 3% | +$12,000 |
| Subtotal before prior payments and credits | $32,000 |
| Earnest money already paid and credited | −$5,000 |
| Estimated amount still due at closing | About $27,000 |
$5,000 already paid + about $27,000 still due = $32,000
The payment is split across stages. The deposit is not added again.
The 3% closing-cost figure is a fictional planning assumption, not a quote or universal percentage. It already includes the example's prepaids and initial escrow funding.
This example assumes no seller or lender credits, financed closing costs, other adjustments, or other closing costs already paid. Moving expenses and savings retained after purchase are outside this example.
If you paid an appraisal, insurance premium, or another expense earlier, ask where that payment is reflected. A receipt does not automatically mean you should subtract it again from the document's cash-to-close figure.
Already included means already counted. If your Loan Estimate or Closing Disclosure already accounts for your deposit or another prior payment, do not subtract it again. Ask your lender or settlement professional to explain an amount that appears missing or incorrect.
Handout B · Complete accessible web version
A cash-to-close document reference - not a complete mortgage review.
Use your current standard buyer Closing Disclosure. For page 3 entries, use the Final column in "Calculating Cash to Close."
Copy the amount and any minus sign exactly as shown. Mark an unclear or missing figure as "Ask" - never assume zero.
These are reference figures, not ten separate bills to add together. Some amounts are already included in others.
This worksheet uses the standard buyer Closing Disclosure. If your form or transaction differs, ask your lender or settlement professional to help locate the amounts.
Page 2; repeated on page 3
Amount shown: ________________
Ask: Which costs changed, including prepaids or initial escrow funding?
Professional’s explanation: ________________
Page 3, Final column
Amount shown: ________________
Ask: What does this amount represent in my transaction?
Professional’s explanation: ________________
Page 3, Final column
Amount shown: ________________
Ask: Where is my earnest money accounted for?
Professional’s explanation: ________________
Page 3, Final column
Amount shown: ________________
Ask: Which earlier payments are reflected here?
Professional’s explanation: ________________
Page 3, Final column
Amount shown: ________________
Ask: Which costs are being included in the loan?
Professional’s explanation: ________________
Page 3, Final column
Amount shown: ________________
Ask: Are any seller-paid items shown elsewhere instead?
Professional’s explanation: ________________
Page 3, Final column
Amount shown: ________________
Ask: What makes up this amount, and how does it affect cash to close?
Professional’s explanation: ________________
Page 2, section J
Amount shown: ________________
Ask: How are these credits already reflected in Total Closing Costs?
Reference only: do not subtract lender credits again from a total that already includes them. Specific lender-paid charges may appear elsewhere; ask rather than assembling a second credit total.
Professional’s explanation: ________________
Page 3, Final column
Amount shown: ________________
Ask: What does this row mean for my transaction?
This is not a retained-savings target and does not, by itself, establish the final amount returned to a buyer.
Professional’s explanation: ________________
Page 3; page 1 summary
Amount shown: ________________
Ask: Does this include all applicable prior payments, credits, and adjustments?
Record the document's figure. Do not replace it with a hand-calculated amount or treat this worksheet as payment instructions.
Professional’s explanation: ________________
Seller-paid individual fees and a general seller credit may appear differently. Do not count both as additional deductions without reconciliation.
Keep savings you choose to retain separate from these document figures.
The figure I still need explained: ________________
My question for the lender or settlement professional: ________________
Use it in a conversation
For first-time buyers and educators supporting introductory homebuying workshops, library programs, nonprofit services, and individual learning.
Use the lesson, video, and one or both handouts for a 20–30 minute discussion. Work with the fictional example, without sharing personal documents or financial information. These resources provide supplementary education; they do not provide certification, accreditation, or course-completion credit.
HomeBuyersPath permits you to download, print, email, and distribute complete, unmodified copies of "Money Already Paid vs. Money Still Due at Closing" and "Before Closing: 10 Numbers to Double-Check" for personal and educational use.
Educators may include them in class packets, including programs that charge for instruction, but may not sell the handouts separately. Keep HomeBuyersPath attribution, sources, qualifications, version information, and this notice intact. Learners may complete the worksheet spaces.
Accessible-format conversions are permitted when they preserve the content and attribution. Contact HomeBuyersPath about other adaptations or translations.
This permission does not cover the paid workbook, paid PDFs, customer ZIP, product assets, or third-party materials. Prefer linking to the resource page for current versions; no reciprocal link is required.
Contact HomeBuyersPath about adaptations or translations.
HomeBuyersPath offers a free lesson on the money required before and at closing, including earnest money, down payments, closing costs, prepaids, escrow, and cash to close. The resource combines plain-language guides, free calculators, a worked-example video, and two printable handouts. No account, email signup, or purchase is required.
Reviewed · Handout version 1.0. The examples are educational, not loan approval, spending recommendations, or official closing figures. Citing CFPB sources does not imply CFPB endorsement.
The Homebuyer Decision Toolkit is a separate paid digital download for organizing purchase assumptions, cash planning, home comparisons, and mortgage offers. It is not required for this lesson or the free calculators, and it does not make their estimates more accurate.
Desktop Microsoft Excel is required and sold separately.
