How to Calculate a Down Payment & Closing Costs
- 1). Calculate your down payment by multiplying the percentage of the down payment by the purchase of the home. A down payment is usually between 3 percent and 20 percent of the purchase price of the home. Your credit history, income and the type of mortgage you are getting will determine what percentage you will need to pay. So, if you are purchasing a home for $100,000 and you are getting a loan through the Federal Housing Administration and will only need a 3 percent down payment, you will only need $3,000 upfront. This calculation reads like this: $100,000 x (multiplied by) .03 = $3,000.
- 2). Find the amount of your closing costs by adding all of the transaction fees together and then adding them to the percentage of the real estate agent's commission multiplied by the purchase price of the home. Closing costs represent the commissions that are going to the agents and brokers involved in the transaction; points; title insurance; and any other fees that you may be charged during the purchase of the home. So, if the brokerage that your agent goes through is getting 5 percent of the transaction and the seller's brokerage is getting 5 percent, you will multiply your purchase price by 10 percent. Then add all of the associated fees together and add them to the commissions.
If the purchase price is $100,000 and each brokerage gets 5 percent, then $100,000 x .05 = $5,000. If the total of points, title insurance and any other fees adds up to $1200, then closing costs would be $6,200. - 3). Ask your lender for an idea of what closing costs will be before you are asked for a check. If you feel as though you are paying a lot of fees, don't be afraid to ask what the fees are for and if they can be reduced. Ask other lenders what their closing costs are like. Generally, a seller pays for the commission of his agent out of the proceeds of the sale, while a buyer may pay for the commission of her agent in the closing costs. Sometimes, though, a seller will pitch in with the closing costs, particularly if the seller is very motivated to sell the home.
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