How Much Cash You Need Beyond the Down Payment

You have saved the down payment and found a home within your price range. Before you make an offer, answer one more question: how much money will remain available after every purchase expense is paid?

List what you need to pay before closing, what remains due on closing day and the cash you want to keep afterward. Calculate these for the specific property and financing plan rather than applying a general cost percentage.

Start with the down payment. Then identify transaction charges, such as lender fees and applicable title, legal, recording, or property-related charges. A third category covers prepaid expenses and any initial escrow funding. Those amounts can include advance insurance payments and interest associated with the closing date. Your lender’s disclosures identify which charges apply. The CFPB Closing Disclosure explainer explains these categories.

Keep a fourth category for moving, immediate work, and your financial cushion. This money should remain available after the purchase. The CFPB recommends setting aside funds for initial home expenses and emergencies when deciding how much cash to commit. Your household’s needs should guide that reserve. See its down payment planning guidance.

For each budget item, record the estimated amount, who will confirm it and when it is due. Mark unclear amounts as pending rather than entering zero, which would understate the total.

For a mortgage using a Loan Estimate, review its Estimated Cash to Close calculation. That figure generally combines the down payment and closing costs, then accounts for a deposit already paid, applicable credits, and adjustments. It represents additional money needed at closing. CFPB Loan Estimate explainer

Consider this simplified example, with invented figures and no additional adjustments:

• Total down payment: $160,000
• Closing costs and prepaid items: $24,000
• Deposit already paid toward the purchase: $40,000
• Applicable credits: $4,000
• Remaining cash to close: $140,000

If the disclosure already shows $140,000 after accounting for the deposit, do not subtract the $40,000 again. Separately, if you want $25,000 available after closing, your current funds must cover both the remaining $140,000 and that $25,000 reserve. The deposit has already left your account.

Use the example to check the logic, then have your lender and closing attorney reconcile your actual figures. Include fees paid earlier in your overall purchase budget, while ensuring they are not charged a second time in your closing calculation.

New York’s additional transfer tax, commonly called the mansion tax, is 1% of the sale price for applicable residential transactions with consideration of at least $1 million. It is not calculated only on the portion above $1 million. NYC residential transactions of $2 million or more can also trigger a supplemental tax. The buyer generally pays these taxes. Ask your attorney to calculate the applicable amounts and any exceptions for your transaction. New York Department of Taxation and Finance

For a condo or co-op, request the building’s current purchase and move-in requirements. Ask which amounts are fees, which are potentially refundable deposits, and when each is due. Use a separate checklist for each property rather than assuming two similarly priced apartments require identical cash.

Do not estimate every New York purchase with one closing-cost percentage. Ask the lender and attorney to separate loan charges, title or lien-related work, legal fees, recording charges, transaction taxes, building fees and prepaid expenses. Some categories vary with ownership type, financing and contract allocation.

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For an ordinary, fully residential transaction subject to New York’s mansion tax, the tax begins at $1 million of consideration and applies to the whole applicable amount. A simplified $999,000 sale has no mansion tax; a $1,000,000 sale has $10,000. Thus a $1,000 price difference can create an $11,000 combined price-and-mansion-tax difference, before other changes. This assumes no special allocation, gross-up or exemption.

For covered NYC residential transactions, the combined mansion and supplemental rate is generally:

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These are threshold rates, not marginal tax brackets applied only to the excess. They do not include other transfer taxes or all closing costs. Have counsel confirm the taxable consideration and classification. Do not apply NYC’s supplemental schedule automatically to a Long Island transaction outside NYC.

Ask your lender for a written estimate based on your target price and loan structure, and ask your attorney which property-related costs remain unconfirmed. Then check how you would adjust the budget if closing costs increase or repairs are needed before moving in.

Can seller credits solve a cash shortage? Ask the lender to confirm permitted credits and their treatment before counting on them. A proposed concession is not available money until the transaction documents and financing support it.

Compare down-payment options together with the financing terms and cash you would retain. The calculation should show both the funds needed on closing day and the household budget afterward.

Continue with buyer agreements before touring and protecting your closing funds.

Talk with a B Square Realty agent about your target property and budget questions, then confirm your personal cash requirements with your lender and attorney before committing.