How Much Cash Do I Need to Buy a Home besides the Down Payment?

One of the most common surprises for first-time buyers in Washington State is discovering that the down payment isn’t the only cash they need at closing. There are several other costs that require out-of-pocket funds — some before you even open escrow, and some that show up on your final Closing Disclosure.

Here’s a complete breakdown of what to budget for beyond the down payment.

Earnest Money

Earnest money is a good-faith deposit you submit with your offer to show the seller you’re serious. In Washington State, earnest money is typically 1–3% of the purchase price, though in competitive Seattle-area markets, stronger offers often include higher earnest money.

On a $700,000 home, that’s $7,000–$21,000 due within a day or two of mutual acceptance — before inspections, before appraisal, and well before closing.

The good news: earnest money is not an additional cost. It is applied toward your down payment or closing costs at closing. But it does need to be liquid and available immediately when your offer is accepted.

This is definitely a subject to discuss with your real estate broker who can share what is typical in the current market.

Home Inspection

A general home inspection is not required by lenders, but it is strongly recommended — and nearly universal in Washington State purchase transactions. A thorough inspector will review the structure, roof, electrical, plumbing, HVAC, and more.

Typical inspection costs in Washington State:

• General home inspection: $400–$650 for a single-family home, more for larger homes
• Sewer scope: $150–$250 — highly recommended in older neighborhoods
• Radon test: $150–$200 — worth considering in many Western Washington areas
• Chimney inspection: $150–$300 if applicable
• Pest inspection: $100–$150 — required by some loan programs

Budget $500–$1,000 for inspections depending on the property and what tests make sense. These are paid directly to the inspection company, typically at the time of inspection — not through escrow.

Appraisal

Most purchase mortgages require an appraisal to confirm the home’s value supports the loan amount. The appraisal fee is typically collected by your lender upfront or at closing.

Current appraisal fees in Washington State:

• Standard single-family appraisal: $600–$900
• Complex or higher-value properties: $900–$1,500+
• FHA appraisals: Similar range, though FHA has specific property condition requirements

Some loan programs allow appraisal waivers based on automated underwriting — your loan officer can confirm if your transaction qualifies.

Prepaid Items

Prepaid items are costs collected at closing that are not lender fees — they’re expenses you would owe regardless of who you financed with. They include:

Homeowner’s Insurance

Lenders require proof of homeowner’s insurance at closing, and most require the first year’s premium to be paid upfront. In Washington State, annual premiums typically run $1,200–$2,500 depending on the home’s value, location, and coverage level. Shopping multiple insurers before closing is worthwhile.

Prepaid Interest

Mortgage interest is paid in arrears — meaning your March payment covers February’s interest. At closing, lenders collect prepaid interest from the closing date to the end of the month. If you close on the 1st of the month, you’ll owe a nearly full month of prepaid interest. If you close on the 28th or 29th, you’ll owe just a few days. Closing later in the month reduces this cost.

Property Tax Reserves

If your loan includes an escrow account for taxes and insurance (most do), the lender will collect an initial deposit to fund the account — typically 2–3 months of property taxes upfront. In King County, where property taxes are among the highest in the state, this can add up quickly.

Lender Reserves

Many loan programs require you to have reserves remaining after closing — meaning cash left in the bank after all down payment and closing costs are paid. Reserves are typically measured in months of mortgage payments.

• Conventional loans: Reserves vary by down payment and loan program — automated underwriting determines the requirement
• Jumbo loans: Often require 6–12 months of reserves
• Investment properties: Typically require 6 months of reserves
• Multiple financed properties: Higher reserve requirements apply

Reserves do not need to be cash — retirement accounts (at a discounted value) and other investment accounts often qualify. Your loan officer will confirm what counts for your specific program.

HOA Dues and Move-In Fees

If you’re buying a condo or home in a community with a homeowners association, there may be additional costs at closing:

• Prorated HOA dues: Your share of dues for the remainder of the month you close
• HOA transfer fee: A fee charged by the HOA to transfer membership to the new owner — varies widely, typically $100–$500
• Move-in fee or deposit: Some condo buildings charge a separate move-in fee, particularly in high-rise buildings in Seattle

Other Costs to Budget For

• Home warranty: Optional but common in Washington State purchase transactions. Typically $400–$700 for a one-year warranty covering major systems and appliances. Sometimes negotiated as a seller concession.
• Utility deposits and connection fees: Some utilities require deposits for new accounts
• Moving costs: Don’t overlook this — local moves in the Seattle area typically run $1,000–$3,000 depending on the size of the move
• Immediate repairs or improvements: Even a move-in ready home may need paint, locks changed, or minor repairs before you’re comfortable

Putting It All Together — A Realistic Budget

Here’s a rough estimate of non-down-payment cash needs for a typical Washington State purchase at $700,000:

Note: Closing costs (lender fees, title, escrow) are separate and typically run 1–2% of the loan amount. This table covers additional cash needs beyond the down payment and standard closing costs.

The bottom line is that most buyers should budget an additional $5,000–$15,000 beyond their down payment and closing costs for the items above — more in high-HOA buildings or if significant reserves are required.

Ways to Reduce Out-of-Pocket Cash

• Seller-paid closing costs: In some markets and situations, sellers may agree to contribute toward closing costs, reducing your cash needed
• Lender credits: Accepting a slightly higher rate in exchange for a lender credit can offset closing costs
• Down payment assistance: Washington State DPA programs can cover down payment and in some cases closing costs
• Gift funds: Most loan programs allow gift funds from family members for down payment and closing costs
• Close later in the month: Reduces prepaid interest collected at closing

Start the Conversation Early

The best time to understand your full cash-to-close picture is before you start shopping — not after you’re under contract. I can put together a detailed estimate based on your target price range, loan program, and the areas you’re considering in Washington State.

See also: How Much Should You Put Down on a Home in Washington State? and Debt-to-Income Ratio: How It Works for Washington Home Buyers

Let’s Talk

Rhonda Porter is a Licensed Mortgage Advisor (NMLS #121324) at New American Funding (NMLS #6606), serving home buyers throughout Washington State.