Your down payment is only one part of the cash plan. Separate purchase costs from money you want to keep for moving, repairs and emergencies.
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Also plan for moving and emergency savings. Credits and deposits already paid can change cash to close.
Save for more than the down payment
Your down payment is part of the purchase price you pay yourself. Closing costs are separate. The CFPB gives 2–5% of the home price as a rough closing-cost range; the actual amount depends on the loan and location.
A planning example
For a $350,000 home, a hypothetical 5% down payment is $17,500. If closing costs were 3%, that would add $10,500: $28,000 combined before credits, deposits already paid and other adjustments. These percentages are an example, not a quote or an eligibility rule.
Keep a cushion
Add moving expenses, utility setup and immediate repairs to your plan. Set aside emergency savings before deciding how much to put down. A bigger down payment leaves less cash available for other needs.
Ask about assistance
Ask a housing counselor or local housing agency about programs. Check income and purchase-price limits, education requirements, available funding and repayment terms. Find out whether assistance is a grant or a loan before counting it toward your purchase.
Compare a smaller down payment with your cash cushion
Ask for two loan scenarios using different down payments. Compare the monthly cost, upfront cost and savings left after closing. The lowest monthly payment may require more cash than you want to commit.
Read assistance terms before relying on it
Ask for a written explanation of eligibility, required education, available funding and repayment triggers. Put the program’s contribution in your budget only when you understand its conditions and the lender confirms how it fits the loan.
SEE THE NUMBERS
From purchase costs to an example cash plan
| Illustrative item | Amount |
|---|---|
| Down payment | $17,500 |
| Closing costs, including assumed prepaids/escrow | $10,500 |
| Subtotal | $28,000 |
| Less deposit already paid | −$3,000 |
| Less assumed seller credit | −$2,000 |
| Illustrative remaining cash to close | $23,000 |
| Moving and initial setup, kept separately | $2,000 |
| Emergency savings, kept separately | $10,000 |
Using the earlier $350,000 example. Real credits, deposits, adjustments and assistance must be shown and allowed in your transaction. Do not subtract a deposit or credit twice. Moving and emergency money are outside cash to close.
Key terms, in plain English
- Down payment
- Your upfront contribution to the home price.
- Closing costs
- Charges for the loan and property transaction, separate from the down payment.
- Cash to close
- The final amount due at closing after the listed deposits, credits and other adjustments.
- Prepaids
- Expenses collected in advance, such as certain insurance or interest charges.
Common mistakes to avoid
- Using all savings for the down payment.
- Counting assistance before approval and funding are confirmed.
- Assuming every assistance program is a grant with no repayment conditions.
Questions to ask
Bring these to your lender, agent or housing counselor, as appropriate.
- Does this estimate include prepaid expenses and initial escrow?
- When and how is each credit applied?
- When would assistance become repayable if I sell or refinance?
Common questions
Do I always need 20% down?
No. Some conventional programs allow 3% down and FHA can allow 3.5%, subject to eligibility. Eligible VA or USDA borrowers may have zero-down options. The smaller down payment can come with insurance or program costs.
Are closing costs included in the down payment?
No. They are separate. Your final cash-to-close calculation combines the applicable costs and subtracts listed credits and money already paid.
How much should I keep after closing?
Choose a reserve based on your household expenses, income stability and expected repairs. Keep that reserve separate when you calculate what you can spend on the purchase.
Your next steps
- Separate down payment from closing costs.
- Get a written estimate for your own purchase.
- Keep emergency and moving funds in the plan.
Sources and further reading
Official resources checked October 12, 2026. Loan and program rules can change. Confirm the requirements for your own purchase.
Educational information and planning examples; not a loan offer or personalized financial advice.