The big picture
The cash you need to buy a home is usually more than the down payment alone. It's the sum of your down payment, your closing costs, and certain prepaid items, minus any credits (for example, from a seller or an assistance program). Your lender will total this up as your cash to close.
Every purchase is different, so this guide explains the pieces rather than quoting numbers. Your lender's Loan Estimate is the document that turns these categories into real figures for you.
Earnest money (paid early, credited later)
When your offer is accepted, you deposit earnest money, usually with the escrow company. It shows the seller you're committed. The amount is negotiated in your purchase agreement. At closing, it's credited toward your down payment and costs, so it isn't an extra cost; it's just paid early. Your agreement and its contingencies determine when earnest money is refundable, so read those terms carefully.
Your down payment
Many buyers assume they need a very large down payment. In reality, several loan types allow smaller down payments, including some conventional programs, FHA loans, and VA loans for eligible service members and veterans. A smaller down payment usually means a larger loan and often mortgage insurance, so the trade-off is a higher monthly payment. Your lender can show side-by-side scenarios.
Down payment assistance programs can also help eligible buyers. See Washington first-time home buyer programs and the City of Seattle's Buy a Home page.
Lender costs
Lender charges can include origination or underwriting fees, an appraisal, a credit report, and any discount points you choose to pay to lower your rate. Under federal rules, lenders must give you a Loan Estimate shortly after you apply, which makes it easier to compare offers. The CFPB's homebuying resources explain how to read it.
Prepaid items and escrow reserves
At closing, you'll typically prepay some ongoing costs: your first year of homeowners insurance, interest from closing to the end of the month, and often a cushion of property taxes and insurance held in an escrow (impound) account so your lender can pay those bills for you. These aren't fees; they're your own housing costs paid in advance, but they still need to be in your cash-to-close budget.
Escrow, title, and recording
In Washington, an escrow company or closing attorney handles the closing. Escrow fees are often shared between buyer and seller, depending on the agreement. Your lender will also require a lender's title insurance policy; who pays for the owner's policy is negotiable, though in many Washington transactions the seller customarily pays for it. Recording fees cover recording your deed and deed of trust with the county.
One cost that typically isn't yours: Washington's real estate excise tax is generally the seller's obligation. The Department of Revenue has the details.
Condo and HOA costs
If you're buying a condo or a townhome with an HOA, expect HOA-related items such as prorated dues, possible transfer or move-in fees, and sometimes a capital contribution. The resale documents will show what applies. For condo-specific questions, the HOA guide on Bellevue Condo Living covers what to look for in the documents.
Costs outside of closing
- Inspections: paid directly to the inspector, usually before closing.
- Buyer's brokerage compensation: set by your written buyer agreement. A seller or listing firm sometimes offers to pay some or all of it; if not, some or all may be the buyer's responsibility, and it may be possible to negotiate a seller credit. We'll discuss this up front.
- Moving and setup: movers, utility deposits, and basics for the new place.
- A reserve fund: lenders may want to see some savings left after closing, and it's wise to keep a cushion for surprises.
Ways buyers reduce cash to close
- Down payment or closing cost assistance, if you're eligible
- Seller credits negotiated as part of your offer (they must fit your loan's rules)
- Lender credits in exchange for a slightly higher rate
- Documented gift funds from family, where your loan allows it
- Timing your closing date to reduce prepaid interest
Each option has trade-offs, and some are harder to use in competitive situations. We'll weigh them for each home you consider.
Next steps
Ask a lender for a Loan Estimate based on a realistic price, then book a free consult to talk through what you see. If you're early in the process, read the buying process next, and set up a home search to get a feel for prices in the areas you like.
This guide is general information, not legal, tax, or financial advice, and details can change. Information is deemed reliable but not guaranteed; please verify anything important for your situation.
Loomis Hamilton is a real estate broker with McConnell Group who helps home buyers, including many first-time buyers, across Seattle and the greater Seattle area. MLS ID WA 138027.
(425) 516-2041 · l.hamilton@mcconnellgroup.com · Contact page