Understanding the Costs That Come Before Move-InPurchasing a new home is an exciting milestone, but it also comes with important financial steps. To help you feel confident throughout your homebuying journey, we’re breaking down the three key costs that typically come before move-in: deposits, down payments, and closing costs. Understanding each will help you plan ahead and feel more prepared when it’s time to make your purchase.
When you purchase a home with Empire, your journey begins with a deposit, specifically the earnest money deposit. This initial deposit is required to secure the contract and is calculated as a percentage of the lot premium, base price of the house, and structural items. If you’re customizing your home from the ground up, additional deposit funds—a percentage of your Design Centre selections—is required after completing the design phase.
Our New Home Specialists can provide you with an estimated breakdown of the deposit and outline when they’re due. It’s important to note that 100% of the deposit provided at the contract and design stages is credited to you at closing, effectively reducing your down payment for the mortgage.
The mortgage down payment is a significant financial aspect of the homebuying process, representing your commitment to the investment. Typically based on the loan program, the down payment is paid at the time of closing. It can range from as low as 3% to as high as 20%, providing you with instant equity in your new home.
The deposit funds you’ve given to us are factored into the down payment calculation. The more you contribute upfront, the less you need to finance, resulting in lower monthly mortgage payments.
Closing costs are the final piece of the puzzle, involving a lump sum of money paid by the buyer on the scheduled closing date. This sum includes the down payment plus closing costs, minus any deposit or design funds already provided, and may also reflect any closing cost incentives we offer. To estimate your closing costs, plan for approximately 2% to 2.5% of the final purchase price of the home. Empire’s preferred lenders can provide accurate estimates for all mortgage-related costs, ensuring you’re well-prepared for this crucial step.
Example: You’re purchasing an Empire home with a final price of $500,000. You plan to make a 10% down payment ($50,000) and have already paid a $23,000 deposit during the contract and design phases. Closing costs total $12,500, and Empire is offering a $3,000 seller credit to help offset some of those costs. In this scenario, your total amount due at closing would be approximately $36,500, calculated as follows: $50,000 (down payment) + $12,500 (closing costs) – $23,000 (deposit/design money) – $3,000 (Empire’s closing cost incentive).*
*Amount varies by community.
Understanding deposits, down payments, and closing costs is just one part of preparing for your home purchase. To help you feel even more confident, be sure to check out our Guide to a Smooth and Stress-Free Home Closing for helpful tips on what to expect during the final stage of your homebuying journey.