How much cash do I need to buy a $400,000 house?

With 20% down, about $86,400 to $96,000 before reserves: an $80,000 down payment plus closing costs of 2–5% on the $320,000 loan. Add six months of payments and the honest target is nearer $99,000 to $108,000. With 5% down the same house takes $27,600 to $39,000 to close.

Do I really need 20% down?

No. Conventional loans start around 3% and FHA around 3.5%, and the price of getting there is private mortgage insurance — $150 a month at 10% down on a $400,000 purchase, $158 at 5% — which falls away once the loan reaches 80% loan-to-value. The PMI Calculator shows how long that takes on your numbers.

What is the difference between closing costs and the down payment?

The down payment buys equity; closing costs do not. Closing costs are lender, title, appraisal and recording fees plus prepaid interest and escrow funding, typically 2–5% of the loan. They are separate from the figures a payment calculator produces, which is why the bill at the table is larger than the estimate you brought with you.

What is earnest money and do I get it back?

Earnest money is a deposit with your offer, usually 1–2% of the price — $4,000 to $8,000 on a $400,000 home. It is credited toward the purchase rather than added on top, so it is not an extra cost, but it must be available days after acceptance and it is at risk if you walk away outside a contingency.

How much should I keep in reserves after closing?

Two to six months of the total payment is the common range, and lenders increasingly ask for it in writing. Six months of a $2,023 principal-and-interest payment is about $12,100 before tax and insurance are added, which is one reason the price you can comfortably afford sits below the price a lender will approve.

How Much Cash Do You Need to Buy a House?

4 min read · updated October 6, 2026

Ask a first-time buyer what they need to buy a house and they will name one number: the down payment. Ask them a month after closing and they will tell you the truth — the down payment was the largest cheque, but it was nowhere near the only one.

Cash comes at you in five places: the down payment, closing costs, prepaid and escrow items, the earnest money you put down weeks earlier, and whatever cushion the lender wants to see left over when you sign. Here is each one on the same purchase — a $400,000 home at 6.5% over 30 years — so the total stops being a surprise.

1. The down payment: the biggest line, and the most flexible

On a $400,000 purchase the arithmetic is simple and the decision is not: 20% is $80,000, 10% is $40,000, 5% is $20,000 and 3% is $12,000. The Down Payment Calculator prices each of those against the loan it leaves behind, and the tradeoff is steady — every percentage point you shift out of the down payment adds about $27 a month for the life of the loan. Below 20% you also take on private mortgage insurance: $150 a month at 10% down on this purchase, $158 at 5% (PMI Calculator). The payment itself moves from $2,023 at 20% down to $2,275 at 10% and $2,402 at 5% (Mortgage Payment Calculator).

2. Closing costs: 2–5% that buys you no equity

Closing costs run roughly 2–5% of the loan, so on a $320,000 mortgage that is about $6,400 to $16,000 handed over at the table. Inside that figure sit the lender's origination charge, title and escrow fees, the appraisal, recording fees and a few days of prepaid interest. Note what none of it is: equity. The Refinance Break-Even Calculator is the one place on this site where fees are modelled, because a refinance has to earn them back — and the same logic is worth applying to a purchase if you plan to move soon.

3. Prepaids and escrow: the boring half

Your lender will want the escrow account funded before it lends, which usually means the first year of homeowners insurance up front plus a cushion of roughly two months of property tax — about $733 at a 1.1% rate on this house (Property Tax Calculator). If the seller has already paid the year's tax bill, you reimburse them for the days after closing. None of this appears in a monthly payment comparison, which is exactly why it surprises people.

4. Earnest money: cash that leaves before the house is yours

Your offer comes with earnest money, typically 1–2% of the price — $4,000 to $8,000 here. It is credited toward your purchase rather than added on top, but it has to be in your account days after the offer is accepted, and it is at risk if you walk away outside a contractual contingency.

5. Reserves: the cushion the lender asks about

Most lenders want to see a couple of months of payments left after closing; two to six months is the common ask, and it is good advice even when nobody requires it. Six months of a $2,023 payment is about $12,100, and tax and insurance push the honest figure higher. This is also the quiet reason the price you can afford usually sits below the price you were approved for — the affordability calculator stops at income and payment, not at what a leaking water heater costs in month three.

What it adds up to

At 20% down on this $400,000 home you need roughly $86,400 to $96,000 in cash before reserves, call it $99,000 to $108,000 with six months behind you. At 5% down the same house needs $27,600 to $39,000 to get through the table — and then $2,560 a month including PMI, against $2,023 for the buyer who saved longer. That is the whole trade: cash you have today versus cost you carry for thirty years, and only you know which one is scarce.

A rule of thumb worth stealing

Save the down payment, then add about 4% of the loan, then two months of payments, and you will not be caught short. The Down Payment Calculator gives you the first number in seconds; the rest is a conversation with your lender about the Loan Estimate, which itemises the fees long before you sign anything. If you are early enough to still be planning, the five first-time buyer mistakes are worth pricing before you shop, because the down payment is mistake number two.