What Is Cash to Close?
Cash to close is the total amount a buyer must bring to closing: the down payment plus closing costs and prepaid items, minus any earnest money already deposited and any seller or lender credits.
Formula
Cash to Close = Down Payment + Closing Costs + Prepaids − Earnest Money − Credits
Example
On a $400,000 purchase with 10% down ($40,000), $9,000 of closing costs, $3,000 of prepaids, $5,000 of earnest money already paid and a $2,000 seller credit, cash to close is $45,000.
Why It Matters
It is the number that has to be in your account (and wired correctly) before closing - budgeting only for the down payment is a common reason buyers come up short.