Deal teardown 02 · Purchase funds
Why $87,500 Down Became $99,750 Cash to Close
Down payment was only the first line. Points, closing costs, prepaids, and the credited deposit changed the funding target by $12,250.
Published · Educational scenario
Scenario inputs and outputs
The numbers behind the result
- Purchase price
- $350,000
- Modeled loan
- $262,500
- Down payment
- $87,500
- Two points
- +$5,250
- Other costs + prepaids
- +$12,000
- Deposit credited
- −$5,000
Reconciliation
Estimated cash to close
$87,500 + $5,250 + $7,500 + $4,500 − $5,000 = $99,750
Down payment is not a safe proxy for cash to close. Reconcile every major line and budget required post-closing reserves separately before wiring funds.
Reconcile the purchase line by line
The $87,500 down payment equals the $350,000 purchase price minus the $262,500 modeled loan. Two points add $5,250. Other closing costs add $7,500 and prepaids or initial escrows add $4,500. A $5,000 deposit already credited to the transaction reduces the remaining amount.
Keep reserves outside this total
The $99,750 estimate is not the same as total liquidity needed. A provider may require verified funds to remain after closing. Those reserves can be measured from PITIA or another provider-defined amount and may have account, documentation, or seasoning rules.
- Request a current, itemized cash-to-close estimate.
- Confirm which points, lender, broker, title, legal, recording, and government charges apply.
- Use only written seller or lender credits and confirm which costs they can offset.
- Independently verify settlement and wire instructions before sending funds.
Expect the number to move
Closing date, prepaid interest, insurance, tax prorations, escrows, appraisal, title, final loan amount, points, credits, and other transaction charges can change. Replace every modeled input with the provider's and settlement professional's current written itemization.
Run the same check on your deal
Build my cash-to-close worksheet
Replace the example with your price, loan, points, costs, prepaids, deposits, and written credits.
No account or contact details are required to run the calculation. Results are educational estimates, not an approval, commitment, or personalized rate quote.
Frequently asked
Is cash to close the same as a down payment?
No. Cash to close can include the down payment plus points, provider or broker charges, third-party costs, prepaids, escrows, and other items, minus credited deposits and documented credits.
Are DSCR reserves included in the $99,750?
No. This example treats reserves as verified post-closing liquidity rather than a closing cost. Provider definitions and requirements vary.
Is this a final settlement figure?
No. It is an educational reconciliation using stated assumptions. The provider and settlement professional determine the actual amount and applicable documents.
More from the Deal Lab
Method note: this case uses the assumptions displayed above. Real transactions may include different rent treatment, expenses, value, costs, reserves, payoff items, timing, credit, documentation, property rules, pricing, and legal requirements. Verify current written terms directly with the provider and relevant professionals.