- Official section
- National XI.B: Seller Net and Buyer Funds at Closing
- Broker weight
- A named calculation within 7% of the national portion
- Expected scored items
- The current PSI broker outline assigns about 7 of 100 scored national items to Real Estate Math
Real estate math guide
Buyer funds needed at closing without double counting
Buyer-funds questions are not hard because of the arithmetic. They are hard because one number can arrive wearing three different labels. A deposit is buyer money, but it was paid earlier. A seller tax adjustment belongs to the buyer ledger, but it may be a credit. Build the transaction from the buyer's point of view and every sign starts to make sense.
Last updated: August 1, 2026
What calculation do you need to make?
Short answer: Buyer funds needed at closing equal the buyer's total uses of money minus the buyer's available sources and credits. For a standard purchase, use purchase price plus buyer closing costs and debits, minus loan proceeds, earnest money or other deposits, seller credits, lender credits, and other buyer credits. You can also start with down payment, then add unpaid buyer costs and debits and subtract deposits and credits. A debit increases the buyer's obligation; a credit reduces it. Keep down payment, closing costs, prepaids, escrow deposits, financed costs, and prorations in separate rows until the final total. On an actual covered mortgage transaction, the federal Closing Disclosure reports the final Cash to Close, which is broader and more precisely defined than an informal classroom shortcut.
This guide teaches exam setup, not a closing quote. Actual Cash to Close comes from the final transaction documents and can reflect lender underwriting, loan program limits, tolerance cures, financed charges, deposit verification, tax and association adjustments, escrow requirements, title figures, wire instructions, and last-minute changes. The federal Closing Disclosure calculation follows Regulation Z. Use the exact labels, signs, and assumptions in the question. Sources were checked through August 1, 2026.
How do you calculate buyer funds needed at closing?
- Circle the requested result: down payment, closing costs, buyer funds needed, or a specific Closing Disclosure row.
- Choose one ledger: full price minus loan, or down payment as the starting point. Do not combine the two starting methods.
- List buyer uses, including price contribution, unpaid costs, prepaids, initial escrow funding, points, and buyer debits.
- List buyer sources and reductions, including loan proceeds, deposits, seller credits, lender credits, paid-before-closing amounts, and other buyer credits.
- Label any amount financed from the loan so it is not counted both as general proceeds and as a separate cash reduction.
- Add the uses, subtract the sources and credits, and preserve cents until the final line.
- Compare the answer with the approximate down payment. Costs should push it up; deposits and credits should pull it down.
- For an actual disclosure question, follow the form's signs and Regulation Z categories rather than renaming rows from memory.
- Item
- Purchase price
- Buyer-funds effect
- Add as a use
- Exam safeguard
- Then subtract full loan
- Item
- Purchase-money loan
- Buyer-funds effect
- Subtract as a source
- Exam safeguard
- Do not also add down payment
- Item
- Down payment
- Buyer-funds effect
- Add as a use
- Exam safeguard
- Then omit price and loan
- Item
- Unpaid buyer cost
- Buyer-funds effect
- Add
- Exam safeguard
- Check who pays
- Item
- Buyer debit
- Buyer-funds effect
- Add
- Exam safeguard
- Debit increases obligation
- Item
- Earnest-money deposit
- Buyer-funds effect
- Subtract
- Exam safeguard
- Must apply to this closing
- Item
- Seller or lender credit
- Buyer-funds effect
- Subtract
- Exam safeguard
- Do not change price by assumption
- Item
- Paid-before-closing cost
- Buyer-funds effect
- Exclude from new money
- Exam safeguard
- Avoid duplicate funding
- Item
- Financed closing cost
- Buyer-funds effect
- Subtract or omit from cash
- Exam safeguard
- Count financing once
- Item
- Buyer funds needed
- Buyer-funds effect
- Uses minus sources and credits
- Exam safeguard
- Explain difference from down payment
Can you follow the calculation from facts to answer?
Use the full purchase ledger
Scenario: A buyer purchases for $320,000 with a $256,000 loan. Buyer closing costs are $7,500. The buyer has a $4,000 deposit, a $3,000 seller credit, and a $1,200 tax-proration credit. How much more must the buyer provide?
- Total buyer uses are $320,000 + $7,500 = $327,500.
- Sources and credits are $256,000 + $4,000 + $3,000 + $1,200 = $264,200.
- $327,500 - $264,200 = $63,300.
Answer: The buyer must provide $63,300 at closing.
Start with a percentage down payment
Scenario: A $375,000 purchase uses a 10% down payment. Buyer costs due at closing are $9,250. The buyer already deposited $7,500, and the seller gives a $5,000 credit. What are the buyer funds needed?
- Down payment is $375,000 x 0.10 = $37,500.
- Add costs: $37,500 + $9,250 = $46,750.
- Subtract deposit and credit: $46,750 - $7,500 - $5,000 = $34,250.
Answer: The buyer funds needed are $34,250.
Add buyer-paid points once
Scenario: The buyer's loan is $280,000. The buyer pays 1.5 points, $1,400 of other loan charges, and $900 of prepaids at closing. What amount do these items add to buyer funds?
- Points are $280,000 x 0.015 = $4,200.
- Add the other loan charges and prepaids once.
- $4,200 + $1,400 + $900 = $6,500.
Answer: These buyer-paid items add $6,500.
Handle financed closing costs
Scenario: A buyer has a $45,000 down payment and $8,000 in total closing costs. The problem says $3,000 of those costs are financed. A $5,000 deposit and $1,000 seller credit also apply. What cash is needed?
- Only $8,000 - $3,000 = $5,000 of closing costs remain cash-funded.
- Uses are $45,000 + $5,000 = $50,000.
- Subtract the $5,000 deposit and $1,000 credit to get $44,000.
Answer: The buyer needs $44,000 in cash at closing.
Find an unknown purchase price
Scenario: Cash needed is $55,500. Buyer charges are $10,500, the loan is $300,000, the deposit is $6,000, and other buyer credits are $4,000. What purchase price balances the ledger?
- Start with cash = price + charges - loan - deposit - credits.
- Price = $55,500 - $10,500 + $300,000 + $6,000 + $4,000.
- The result is $355,000; substituting it returns $55,500.
Answer: The purchase price is $355,000.
Calculate a cash purchase
Scenario: A buyer pays $210,000 without financing. Buyer closing costs are $4,800. A $10,000 deposit and $2,000 seller credit apply. How much remains due?
- Without a loan, the price remains a buyer use in full.
- Total uses are $210,000 + $4,800 = $214,800.
- Subtract $10,000 and $2,000 to get $202,800.
Answer: The cash buyer must provide $202,800 more.
Which math errors cost the most points?
- Trap
- Add both the purchase price and down payment to buyer uses.
- Correction
- Use price minus loan or start with down payment. Those are two versions of the same price calculation.
- Trap
- Subtract the loan and also subtract the loan percentage from the down payment method.
- Correction
- Once down payment is the starting amount, the purchase-money loan has already been accounted for.
- Trap
- Ignore the earnest-money deposit because it was paid earlier.
- Correction
- If the deposit applies to the closing, it reduces the additional money the buyer must provide.
- Trap
- Subtract every deposit mentioned in the story.
- Correction
- Use only a deposit that remains available and is credited to this transaction.
- Trap
- Treat a seller credit as a lower purchase price.
- Correction
- Keep the price unchanged unless the contract price was amended; apply the credit on the settlement ledger.
- Trap
- Assume all closing costs are paid by the buyer.
- Correction
- Use the allocation in the question because contracts, laws, and negotiated terms can assign costs differently.
- Trap
- Add costs already paid before closing to new cash required.
- Correction
- A prior payment can remain part of total transaction cost without being due a second time.
- Trap
- Add the full closing-cost total after part was financed.
- Correction
- Remove the expressly financed portion from the cash-funded amount and count the financing only once.
- Trap
- Call every advance payment an escrow deposit.
- Correction
- Prepaids pay a stated obligation or coverage period; initial escrow funding builds a reserve for later bills.
- Trap
- Reverse the proration signs because the item benefits the buyer.
- Correction
- Identify who paid or will pay. A buyer benefit can still create a buyer debit when the seller prepaid it.
- Trap
- Treat closing costs and Cash to Close as synonyms.
- Correction
- Cash to Close incorporates price funding, deposits, credits, financed costs, and adjustments beyond closing costs.
- Trap
- Accept an answer far below the down payment without explanation.
- Correction
- Reconcile the difference with identified deposits, credits, financing, or funds payable to the buyer.
Can you solve these original problems?
These questions are original study items aligned to the published outline. They are not copied, recalled, or predicted PSI questions.
1. A $300,000 purchase has a $240,000 loan, $6,000 of buyer costs, a $5,000 deposit, and a $2,000 seller credit. How much must the buyer provide?
- $59,000
- $61,000
- $53,000
- $69,000
Show answer and explanation
Answer: $59,000
$300,000 + $6,000 - $240,000 - $5,000 - $2,000 = $59,000.
2. A buyer makes a 20% down payment on $425,000, owes $8,500 in costs, and has already deposited $10,000. What funds remain due if there are no other credits?
- $83,500
- $93,500
- $75,000
- $103,500
Show answer and explanation
Answer: $83,500
Down payment is $85,000. Add $8,500 and subtract $10,000 to get $83,500.
3. Which item normally reduces additional buyer funds needed when it is applied to the completed purchase?
- Earnest-money deposit
- Buyer debit
- Unpaid buyer closing cost
- Buyer-paid discount point
Show answer and explanation
Answer: Earnest-money deposit
The credited deposit is buyer money already paid, so it reduces new money due.
4. A $250,000 loan has 2 buyer-paid points due at closing. How much do the points add?
- $5,000
- $2,500
- $500
- $50,000
Show answer and explanation
Answer: $5,000
Two points equal 2% of the loan amount, and $250,000 x 0.02 = $5,000.
5. Which statement correctly distinguishes closing costs from Cash to Close?
- Cash to Close also reflects down payment, deposits, credits, and adjustments
- Closing costs always equal the down payment
- Cash to Close excludes every prepaid item
- Closing costs always include the entire purchase price
Show answer and explanation
Answer: Cash to Close also reflects down payment, deposits, credits, and adjustments
The federal calculation uses multiple settlement categories to reach the final amount due from or to the consumer.
Which numbers and formulas are easy to confuse?
- Terms
- Purchase price vs. down payment
- Difference
- Purchase price is the agreed property price. Down payment is the portion of that price not supplied by the purchase-money loan.
- Question cue
- Whole price versus buyer's price contribution.
- Terms
- Down payment vs. Cash to Close
- Difference
- Down payment covers part of the price. Cash to Close also reflects closing costs, deposits, financed costs, credits, and adjustments.
- Question cue
- Price gap versus final settlement amount.
- Terms
- Closing costs vs. prepaids
- Difference
- Closing costs are transaction and loan charges. Prepaids fund items such as interim interest or insurance for a future coverage period.
- Question cue
- Service or transfer charge versus advance payment.
- Terms
- Prepaids vs. initial escrow payment
- Difference
- A prepaid directly pays a coming obligation or coverage period. An initial escrow payment creates a reserve the servicer will later use.
- Question cue
- Paid expense versus funded reserve.
- Terms
- Earnest money vs. down payment
- Difference
- Earnest money is a deposit paid under the contract and later credited if applicable. Down payment is the buyer's total price contribution after financing.
- Question cue
- Earlier deposit versus total price gap.
- Terms
- Buyer debit vs. buyer credit
- Difference
- A debit increases what the buyer owes. A credit recognizes money, value, or reimbursement available to reduce that obligation.
- Question cue
- Add to buyer uses versus add to buyer sources.
- Terms
- Seller credit vs. price reduction
- Difference
- A seller credit offsets agreed buyer charges or obligations. A price reduction changes the amount paid for the property.
- Question cue
- Settlement offset versus amended price.
- Terms
- Seller credit vs. lender credit
- Difference
- A seller credit comes from the seller's side of the transaction. A lender credit comes through loan pricing and offsets eligible borrower costs.
- Question cue
- Contract concession versus creditor offset.
- Terms
- Paid before closing vs. due at closing
- Difference
- A paid-before-closing item may be part of total transaction cost but does not require the buyer to supply that money again. A due item remains in Cash to Close.
- Question cue
- Historical payment versus new closing funding.
- Terms
- Buyer funds needed vs. buyer qualification
- Difference
- Buyer funds needed is a transaction ledger. Qualification evaluates income, debts, assets, credit, and loan standards before closing.
- Question cue
- Settlement arithmetic versus underwriting decision.
What does the outline expect you to calculate?
- Topic
- Purchase price
- What to know
- Contract price, acquisition cost, real property, personal property allocation, amendment, concession, cash sale, financed sale, and buyer obligation
- Best exam move
- Place the full purchase price on the use side only when you also subtract the full purchase-money loan.
- Topic
- Loan proceeds
- What to know
- Principal amount, first mortgage, second mortgage, subordinate financing, purchase-money loan, lender, disbursement, financing, and source of funds
- Best exam move
- Subtract loan proceeds from the total transaction uses because the loan supplies part of the purchase money.
- Topic
- Down payment
- What to know
- Purchase price, loan amount, cash investment, down-payment percentage, loan-to-value ratio, borrower funds, equity, and subtraction
- Best exam move
- Calculate purchase price minus purchase-money loan, or purchase price times the stated down-payment rate, but never add both results.
- Topic
- Earnest money and deposits
- What to know
- Good-faith deposit, contract deposit, escrow, already paid, buyer credit, applied at closing, additional deposit, returned funds, and forfeiture
- Best exam move
- Subtract a deposit from new money due only when it remains available and is credited to this closing.
- Topic
- Loan costs
- What to know
- Origination charge, points, appraisal, credit report, underwriting, application, lender fee, services buyer shopped for, and borrower-paid amount
- Best exam move
- Add only buyer-paid costs that remain due at closing; exclude charges already paid or financed when the prompt identifies them that way.
- Topic
- Other closing costs
- What to know
- Recording, transfer charge, title service, settlement, attorney, survey, inspection, owner policy, government fee, and association charge
- Best exam move
- Classify each item by who owes it in the problem instead of assuming local custom.
- Topic
- Prepaids
- What to know
- Prepaid interest, homeowner's insurance premium, property taxes, mortgage insurance premium, coverage period, due at closing, and future benefit
- Best exam move
- Add a buyer prepaid that remains due, but do not call it an initial escrow deposit or monthly PITI payment.
- Topic
- Initial escrow payment
- What to know
- Reserve account, property tax, homeowner's insurance, mortgage insurance, cushion, monthly deposits, lender collection, and closing balance
- Best exam move
- Treat the stated initial escrow payment as a separate buyer use unless the problem already includes it in total closing costs.
- Topic
- Discount points
- What to know
- One point, 1%, loan amount, rate reduction, upfront charge, borrower paid, seller paid, lender credit, origination fee, and decimal conversion
- Best exam move
- Multiply the relevant loan amount by the point rate, then add the result only if the buyer pays it at closing.
- Topic
- Buyer debits
- What to know
- Amount due, charge, prepaid item owed to seller, association proration, rent proration, utility adjustment, buyer expense, and ledger entry
- Best exam move
- Add every buyer debit because it increases the buyer's total obligation.
- Topic
- Buyer credits
- What to know
- Deposit, seller concession, lender credit, unpaid seller expense, tax proration, association adjustment, allowance, and paid-before-closing amount
- Best exam move
- Subtract every valid buyer credit after verifying that it has not already reduced another line.
- Topic
- Seller credit
- What to know
- Contract concession, closing-cost contribution, repair credit, agreed amount, buyer benefit, lender limitation, and purchase price distinction
- Best exam move
- Subtract the stated credit from buyer funds, but leave the contract price unchanged unless the question says it was amended.
- Topic
- Lender credit
- What to know
- Closing-cost offset, loan pricing, interest rate tradeoff, creditor, negative charge, eligible costs, and disclosed credit
- Best exam move
- Use the stated dollar credit as a source and do not treat it as an additional down payment.
- Topic
- Closing costs paid before closing
- What to know
- Paid outside closing, appraisal payment, application fee, inspection, receipt, prior payment, duplicate charge, and final ledger
- Best exam move
- Do not require the buyer to bring money a second time for a cost already paid, although the cost may still appear in disclosure totals.
- Topic
- Closing costs financed
- What to know
- Paid from loan amount, financed fee, principal allocation, cash reduction, loan program, disclosure, and remaining cost
- Best exam move
- Subtract only the amount the problem expressly finances and make sure the same loan dollars are not counted again as general proceeds.
- Topic
- Cash to Close table
- What to know
- Closing Disclosure, Loan Estimate, total closing costs, paid before closing, financed costs, down payment or borrower funds, deposit, seller credits, adjustments, and final amount
- Best exam move
- Read each federal table row with its displayed sign instead of forcing a memorized classroom formula onto the form.
- Topic
- Reverse buyer-funds problems
- What to know
- Unknown purchase price, unknown loan, unknown deposit, unknown credit, known cash needed, algebra, isolate variable, and verification
- Best exam move
- Write the complete equation first, move known terms, and plug the answer back into the original ledger.
- Topic
- Final reasonableness check
- What to know
- Approximate down payment, cost range, credit direction, cash purchase, financed purchase, negative result, funds to borrower, and double counting
- Best exam move
- Compare the answer with the down payment and explain every material difference using costs, deposits, or credits.
How should you drill this calculation?
- Session
- Session 1
- Focus
- Choose the correct ledger
- Proof you are ready
- Solve ten problems once with price minus loan and again with down payment, confirming identical results.
- Session
- Session 2
- Focus
- Classify buyer uses
- Proof you are ready
- Sort 30 price, cost, prepaid, escrow, point, and debit items without using a calculator.
- Session
- Session 3
- Focus
- Classify buyer sources and credits
- Proof you are ready
- Sort 30 loan, deposit, seller-credit, lender-credit, paid-before-closing, and proration items.
- Session
- Session 4
- Focus
- Master percent inputs
- Proof you are ready
- Calculate 15 down payments, 15 loan amounts, and 15 point charges with correct decimal conversions.
- Session
- Session 5
- Focus
- Read Cash to Close
- Proof you are ready
- Trace each row of the federal Calculating Cash to Close table and explain its effect in plain language.
- Session
- Session 6
- Focus
- Complete a mixed closing set
- Proof you are ready
- Score at least 90% on 20 mixed problems and reconcile every result to down payment, costs, deposits, and credits.
Do not count recognition as mastery. Close the notes and explain the rule, apply it to a new fact pattern, and identify why each distractor fails.
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Questions students ask about Buyer Funds Needed at Closing: Formula and Examples
How do you calculate buyer funds needed at closing?
Use one complete ledger. A reliable exam formula is purchase price plus buyer charges and debits, minus loan proceeds, deposits already paid, and buyer credits. An equivalent shortcut is down payment plus buyer closing costs and debits, minus deposits and credits. Both methods give the same answer when every item is counted once.
What is the simplest buyer funds formula?
Buyer funds needed equals down payment plus unpaid buyer closing costs plus buyer debits, minus earnest money and other buyer credits. If the loan amount is given instead of the down payment, first calculate down payment as purchase price minus loan amount, unless the problem says part of the loan finances costs or serves another purpose.
Does earnest money reduce cash needed at closing?
Yes, when the deposit is being applied to the completed purchase. It is money the buyer already paid, so it normally appears as a buyer credit and reduces the additional amount due at closing. Do not subtract a deposit that the question says was returned, forfeited, or not credited to this transaction.
Are closing costs part of the down payment?
No. The down payment is the purchase price not covered by the purchase-money loan. Closing costs are separate transaction and loan charges. Both can contribute to cash needed, but combining them too early makes it easy to miss a credit or count a fee twice.
How do seller credits affect buyer funds needed?
A valid seller credit reduces the buyer's cash obligation by the amount applied in the problem. It does not reduce the purchase price unless the contract actually changes that price. For an exam question, subtract the credit after totaling the buyer's charges and debits.
Do lender credits reduce Cash to Close?
A lender credit offsets eligible closing costs and can reduce Cash to Close. It is not the same as increasing the loan amount, and it may be associated with different loan pricing. Use the stated credit and do not invent one from an interest-rate fact alone.
What is the difference between closing costs and Cash to Close?
Closing costs are the upfront loan and transaction costs, excluding the down payment. Cash to Close is the final amount due from or payable to the consumer after the down payment or borrower funds, deposit, financed costs, seller credits, and other adjustments are included. The CFPB Closing Disclosure keeps those concepts separate.
Does a buyer debit increase buyer funds needed?
Yes. A buyer debit is an amount charged to the buyer and therefore increases the buyer's side of the ledger. A buyer credit reduces the amount. In a proration, decide who already paid or will pay before assigning the debit and credit.
Are points included in buyer funds needed?
Points paid by the buyer at closing are a buyer charge unless the problem states that another party pays them or that they are financed. One point equals 1% of the relevant loan amount. Calculate the dollar charge first, then place it on the ledger once.
Are these official Illinois broker exam questions?
No. They are original practice calculations aligned to the PSI Illinois broker outline effective June 24, 2026. The current PSI outline, federal Regulation Z, and Consumer Financial Protection Bureau closing materials were checked through August 1, 2026.
Primary sources
- PSI Illinois Candidate Information Booklet dated June 24, 2026
- Consumer Financial Protection Bureau, Regulation Z Section 1026.38 Closing Disclosure requirements
- Consumer Financial Protection Bureau, current Closing Disclosure explainer
- Consumer Financial Protection Bureau, current Loan Estimate explainer
- Consumer Financial Protection Bureau, current guide to the Loan Estimate and Closing Disclosure forms
- Consumer Financial Protection Bureau, current mortgage key terms
The current official outline controls the tested scope. Statutes, regulations, and official agency materials control when a general study rule and a jurisdiction-specific rule differ.
Editorial status
Checked against primary sources
The Pass Illinois editorial team last checked this guide on August 1, 2026. Every practice question is an original study item, and the source links above let you verify the rules that support the lesson.