7-Day Plan — Day 2 of 7
Know how much cash you need
How much cash do I actually need? The down payment is just the start.
Direct answer
Your cash-to-close is your down payment plus closing costs (typically ~2.5% of price in the Bay Area), prepaid property tax and insurance, and a reserve you don't spend on the purchase. On a $725,000 home with $120,000 down, that's roughly $149,000 total — not $120,000.
Why this matters
Down payment is the headline, not the whole bill
Most first-time buyers budget for the down payment and stop there. Then closing week arrives with a wire transfer request for thousands more — title insurance, escrow fees, recording fees, a prorated share of property tax, a full year of homeowners insurance paid upfront, and a lender-required cash reserve.
None of this is negotiable away entirely, though some of it (like seller credits or assistance programs) can offset it. Knowing the real total now means no surprise on closing day.
Evidence
What's actually in your cash-to-close
- Down payment
- Whatever you're putting down — the biggest line item
- Closing costs
- ~2.5% of price (title, escrow, lender fees, recording)
- Prepaid property tax
- A prorated share, paid at closing
- Prepaid insurance
- Often a full year upfront
- Reserves
- 2 months of payments, held back — not spent on the purchase
- Moving costs
- Easy to forget, rarely trivial in the Bay Area
- Credits
- Seller or assistance-program credits can reduce the total
Step by step
How to find your real number
- 1
Start with your down payment
The amount you've already saved and plan to put down.
- 2
Check the affordability calculator's cash-needed figure
It already adds ~2.5% closing costs and a 2-month reserve on top of your down payment — you don't have to do this math by hand.
- 3
Ask about prepaid tax and insurance separately
These vary by closing date and insurer, and aren't fully captured in a generic estimate — get a real number from your lender once you're under contract.
- 4
Check whether an assistance program could offset part of it
Some down payment or closing-cost assistance programs specifically target this gap — see Day 5.
Example
What this looks like with real numbers
Example
$725,000 price, $120,000 down (from the Day 1 example)
Down payment: $120,000
Closing costs at ~2.5%: roughly $18,100
Reserve (2 months of the full monthly payment, ~$5,533/mo): roughly $11,066
Total estimated cash needed: about $149,198 — the calculator's actual output for this scenario, not a rounded estimate.
Checklist
Before you move to Day 3
- Checked the "Estimated cash needed" figure on the affordability calculator for your scenario
- Confirmed your down payment savings actually cover it, not just the down payment portion
- Asked whether an assistance program could offset part of your closing costs (Day 5)
- Budgeted separately for moving costs and immediate repairs/furnishing
Methodology
How cash needed is actually calculated
Methodology
cashNeeded = downPayment + (price × 2.5%) + (totalMonthlyPayment × 2) — down payment, plus a 2.5% closing-cost estimate on the solved purchase price, plus two months of the full monthly payment held in reserve. Full detail: see our methodology page.
Official sources
Caveats: the 2.5% closing-cost estimate is a planning figure, not a quote — actual closing costs vary by lender, title company, and county. Your lender's Loan Estimate, once you're under contract, is the real number.
Next
Day 3: Get mortgage / pre-approval ready
What documents lenders actually ask for, and why getting pre-approved by more than one matters.