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Closing costs are separate from the down payment. In the transparent example below, a $600,000 purchase with 20% down produces $12,557 in estimated closing costs and $132,557 in total upfront funds. After crediting a $12,000 earnest-money deposit already paid, the estimated cash due at closing is $120,557.
Bottom line
Closing costs are separate from the down payment. In the transparent example below, a $600,000 purchase with 20% down produces $12,557 in estimated closing costs and $132,557 in total upfront funds. After crediting a $12,000 earnest-money deposit already paid, the estimated cash due at closing is $120,557.
How much are closing costs on $600,000?
CFPB says closing costs typically run 2% to 5% of the purchase price, excluding the down payment. Fannie Mae describes a typical range of 2% to 5% of the loan amount, while Freddie Mac uses 2% to 5% of the purchase price.
Those different bases matter. On a $600,000 home, the purchase-price range is $12,000 to $30,000. On a $480,000 loan, the loan-based range is $9,600 to $24,000. Neither range is a quote. Location, loan structure, insurance, taxes, points and credits determine the actual number.
What assumptions make this example exact?
This is one reproducible hypothetical, not a national average.
- Purchase price: $600,000
- Down payment: 20%, or $120,000
- Loan amount: $480,000
- Loan: 30-year fixed at an illustrative 6.50%
- Closing date: 15 days of interest remain through month-end
- Discount points: none
- Lender and seller credits: none
- Assumed annual property tax: $7,200, or 1.20% of price
- Assumed annual homeowners insurance: $1,800
- Buyer-paid transfer tax and attorney fee: zero in this scenario
- Earnest money already paid: $12,000, or 2%
The tax and insurance figures are calculation assumptions, not local averages. County tax rules and insurance underwriting can move the result significantly.
Which one-time fees are included?
| One-time charge | Example | Basis |
|---|---|---|
| Lender origination | $3,600 | 0.75% of loan |
| Appraisal | $650 | Hypothetical quote |
| Credit report | $75 | Hypothetical quote |
| Flood and tax services | $100 | Hypothetical quote |
| Title, settlement and lender policy | $2,200 | Hypothetical quote |
| Recording | $250 | Hypothetical quote |
| Survey | $500 | Hypothetical quote |
| One-time total | $7,375 | Loan and transfer costs |
These charges help originate the loan, verify value and transfer clean title. An appraisal waiver, local title custom or government fee can change them.
Why separate prepaids and escrow?
| Prepaid or escrow item | Example | Calculation |
|---|---|---|
| 15 days prepaid interest | $1,282 | $480,000 × 6.50% ÷ 365 × 15 |
| First-year homeowners insurance | $1,800 | Annual assumption |
| Initial property-tax escrow | $1,800 | Three months assumed |
| Initial insurance escrow | $300 | Two months assumed |
| Prepaid and escrow total | $5,182 | Rounded |
The CFPB Closing Disclosure guide explains that prepaids commonly include interest through the end of the closing month and the first annual insurance premium. Initial escrow establishes funds for future taxes and insurance. Prepaid interest changes with the closing date.
What is the actual cash to close?
| Cash calculation | Amount |
|---|---|
| Down payment | $120,000 |
| One-time fees | $7,375 |
| Prepaids and initial escrow | $5,182 |
| Total upfront funds | $132,557 |
| Earnest money already paid | -$12,000 |
| Estimated cash to close | $120,557 |
Estimate cash needed at closing
Estimate cash to close using your own figures.
The calculator is unavailable in this view. Refer to the worked example above.
Calculation details and assumptions
Cash to close = down payment + entered costs − applied credits − earnest money already paid. To avoid treating credits as down-payment funds, this worksheet caps credits at the entered cost total; actual permitted credits may be lower. Prepaids and escrow are editable totals and do not automatically change with the price or down payment. No negative cash requirement is shown. Final figures, eligible costs and any surplus depend on the transaction and Closing Disclosure. CFPB: understanding the Closing Disclosure.
Earnest money is not an added cost if it is credited at closing. Freddie Mac notes that a typical 1% to 2% deposit can be applied toward the down payment or closing costs. If a $450 inspection was paid before closing, the full upfront budget in this scenario becomes $133,007, even though the inspection may sit outside the Closing Disclosure total.
Which inputs can change the estimate most?
CFPB warns that taxes, insurance, government charges, prepaids and initial escrow are not controlled by the lender. Compare lender-controlled charges separately instead of treating an unusually low tax or insurance estimate as a better loan.
What do buyers ask about closing costs?
Q.Is the down payment a closing cost?
No. The down payment is the purchase price not financed by the mortgage. Total Closing Costs and Cash to Close are different lines because cash to close also reflects the down payment, deposits and credits.
Q.Does 20% down eliminate PMI?
For a typical conventional mortgage, 20% down is commonly used to avoid private mortgage insurance. Confirm the actual requirement on the Loan Estimate because loan programs differ.
Q.When does the final number arrive?
For most mortgages, the lender must provide a Closing Disclosure at least three business days before closing. CFPB recommends using that window to compare the final terms with the Loan Estimate and question differences.
Q.Is a no-closing-cost loan free?
No. The cost may be financed or exchanged for a higher rate. Compare APR, monthly payment and total cost, not only the cash due on closing day.
How should you budget for closing costs?
The $12,557 in closing costs is exact only within the assumptions disclosed here. Separate one-time loan and title fees from prepaids and initial escrow. Once you have an address, update taxes and insurance, compare multiple Loan Estimates, and verify the final cash to close on the Closing Disclosure.
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