Step 1: Before House Hunting — Budget for All Costs
Most first-time buyers budget for the down payment and forget closing costs. Total cash needed formula: (Down payment %) + 2.5–3.5% closing costs + 1–1.5% prepaids. On a $300,000 home with 5% down: $15,000 down + $9,000 closing costs + $4,500 prepaids = $28,500 minimum. Factor this into the savings target before starting the home search.
Total cash needed by purchase price (5% down, 3% closing costs, 1.5% prepaids)
| Purchase Price | 5% Down | Est. Closing Costs (3%) | Est. Prepaids (1.5%) | Total Cash Needed |
|---|---|---|---|---|
| $200,000 | $10,000 | $6,000 | $3,000 | $19,000 |
| $300,000 | $15,000 | $9,000 | $4,500 | $28,500 |
| $400,000 | $20,000 | $12,000 | $6,000 | $38,000 |
| $500,000 | $25,000 | $15,000 | $7,500 | $47,500 |
Before making an offer, gather: state DPA program eligibility (check CFPB’s website), VA benefit status (if veteran), employer homebuyer assistance programs (many employers offer $2,000–$10,000 grants), and credit union membership benefits (many CUs offer reduced origination fees for members).
Step 2: During Offer Negotiation — Request Seller Concessions
Include seller concession request in the purchase offer. For FHA: up to 6% ($18,000 on $300K). For conventional with 5% down: up to 3% ($9,000 on $300K). Phrase it clearly: 'Seller agrees to contribute $X toward buyer’s closing costs and prepaid items.' This directly reduces cash needed at closing by the concession amount.
Step 3: At Application — Shop 3 Lenders on the Same Day
Apply to 3+ lenders within a 14-day window (credit inquiries within 14 days count as one inquiry). Compare Loan Estimates on the same day they’re issued (rates change daily). Evaluate: total cash to close, monthly payment, APR. Present the best Loan Estimate to your preferred lender and ask them to match it.
Step 4: At Closing — Verify Every Line
Review the Closing Disclosure at least 3 business days before closing (legally required). Compare each line item to the Loan Estimate. Question: any fee increased from LE to CD, any unfamiliar fee. Request correction before closing day — changes at the table are extremely difficult.
Build Your Step-1 Closing Cost Budget Now
Enter your target price and state — know the total cash needed before starting the search.