The cash timeline
Rather than one lump sum, expect the following sequence:
- At contract: Due Diligence Fee (paid to the seller, generally non-refundable) and Earnest Money Deposit (held in escrow, generally credited to you at closing).
- During due diligence: inspections you order, and the appraisal fee if your lender collects it up front.
- At closing: down payment, lender and attorney closing costs, and prepaid items such as the first year of homeowner's insurance, property tax escrow and prepaid interest.
- After closing: moving expenses, utility deposits, and a reserve for maintenance.
Down payment
Down payment requirements depend on the loan program and your qualification profile. Conventional, FHA, VA and USDA programs each have different minimums, eligibility rules and mortgage insurance treatment, and lender overlays can add requirements beyond the program minimum.
A larger down payment reduces the loan amount and monthly payment, and can affect mortgage insurance. It is a trade-off against keeping cash reserves, not automatically the better choice.
Closing costs and prepaids
Closing costs include lender charges, attorney fees, title work, recording fees and, for buyers, items assigned in the contract. Prepaid items are not fees — they fund your escrow account and cover insurance and interest going forward.
Your lender's Loan Estimate itemizes these early, and the Closing Disclosure states the final figures before settlement. Sellers may agree to contribute toward buyer closing costs; contribution limits vary by loan program.
Assistance may reduce cash needed
Down payment assistance programs exist in North Carolina and may reduce the cash required at closing for buyers who meet program requirements. Availability, income limits and eligibility rules vary and change over time.
Frequently asked questions
- Is the earnest money in addition to the down payment?
- It is paid earlier, but it is generally credited toward your funds due at closing rather than being an extra cost.
- Can closing costs be rolled into the loan?
- Some programs allow certain costs to be financed or covered through a lender credit or seller contribution. Options and limits vary by program and lender.
- How do I get a reliable number for my situation?
- Get a Loan Estimate from a licensed lender. It is program-specific and reflects your actual profile, unlike any general estimate.
Sources & references
Important notice
This guide is general educational information. It is not financial, tax or lending advice, and it is not a loan commitment or an offer of credit. Program availability, requirements, rates and costs vary by lender, program and borrower, and change over time. Confirm details with a licensed lender or tax professional.