How much cash will I need to purchase a home - The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to come up with the:

Earnest Money: The deposit that is supplied when the purchase contract is signed

Down Payment: A percentage of the cost of the home that is due at settlement

Closing Costs: Costs associated with processing paperwork to purchase or refinance a house

Although one can easily obtain mortgage financing without putting up much cash investment, a homebuyer can often get better loan terms with a larger down payment. home buyers with at least 20% down payment often get the lowest interest rates available.

Look at it from a lender's perspective: If you put a large downpayment into a home, you aren't likely going to default. With this lower risk comes better terms on your mortgage. While you may need no cash to purchase a home, having cash will allow you to secure a lower rate on your mortgage.

If you are in a situation where you would rather save your money than lock it into a home, there is always the possibility of asking for a seller concession and try to get approved for 100% mortgage financing.

While this it is possible in today's lending climate to buy a home with literally no money down, it behooves the borrower to at least expect and prepare for some minimal expenses. Look at it this way, if you can buy a home for as little as first and last months deposit for a rental home, you are way ahead.

Nowadays it is possible to purchase a home with a small, or in some instances, even no earnest money deposit. Combined with seller concessions and/or no closing cost loans, it is possible to get into a home with actually no out of pocket expenses.

You must be prepared to come up with the closing costs plus 1 year's worth of homeowners insurance upfront, pay for any application fees, appraisal fees and inspection fees.

Even though you're under the impression that all your closing costs will be paid due to seller concessions, sometimes lenders ask for more than what your loan officer expects, such as 6 months tax reserves, when normally it would be 3 months, etc. Don't be surprised if you have to supply a pittance at the closing table.

You will be provided with a HUD (settlement statement) before closing which details the closing costs and the exact amount you need to bring to the table. A good broker will be able to help you calculate with good accuracy (not exact) what you charges will be.

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