How Much Money Do You Need Before Closing?

Buying a home? Your down payment and closing costs aren’t the only expenses you need to plan for before your sign your mortgage at the closing table.

There are several costs you’ll need to cover before closing day, including earnest money, home inspections, appraisal fees and potentially buyer agent fees.

If you’re buying a home in Bloomington-Normal or elsewhere in Central Illinois, here’s what you should budget for, when you’ll need the money, and which expenses you might not get back if the sale falls through.

Here’s an example of what a buyer purchasing a $200,000 home might need available before closing.

Expense	Cost
Earnest Money (often up to 1%)	$2,000
Home Inspection	$450
Radon Inspection	$125
Appraisal Fee	$500
Total	$3075

_{^{Illustrative example using your estimated local fees. Actual costs vary. Excludes travel, additional inspections, and any buyer-agent compensation due before closing.}}

Note: Your earnest money generally gets credited toward the amount you owe at closing. It’s not necessarily an additional expense on top of your down payment and closing costs. However, you still need to have that money available when your contract requires it.

Now, let’s break down each of these expenses so you know what to expect, when you’ll need the money, and what you might be able to get back if the sale falls through.

1. Gas & Travel Costs

Unless you’re buying the first home you see (which rarely happens), expect to spend time and money driving between showings. If you’re looking in multiple areas or touring homes over several weeks, gas costs can add up.

2. Earnest Money Deposit (EMD)

Once your offer is accepted, you’ll need to put down earnest money—essentially a good faith deposit to show the seller you’re serious. In our local market, this is often up to 1%, more of the accepted offer price. This money is typically applied to your closing costs or down payment but will need to be available upfront.

3. Home Appraisal Fees

If you’re financing your home, your lender will typically require an appraisal to help determine the property’s value and ensure it supports the loan amount.

What should you expect to pay?

Appraisal fees can vary significantly between lenders. Locally, I’ve seen fees around $500, while some online lenders have charged as much as $1,000.

Some lenders collect the appraisal fee upfront, while others include it in the amount due at closing. Be sure to ask your lender how much the appraisal will cost and when payment is required.

Tip: When comparing lenders, look beyond the interest rate! Ask about appraisal fees and other lender charges so you understand the full cost of your loan.

4. Home Inspection Costs: What Should You Budget For?

Depending on the terms of your purchase contract, if requested in the contract, you may have the opportunity to inspect the property before completing the purchase. Inspections can help you better understand the home’s condition and identify potential repairs.

NOTE: Inspections are intended to help identify defects, safety concerns, and other issues with the home. They’re not meant to be an opportunity to nitpick every imperfection in hopes of negotiating a lower price. I talk about this in a separate post.

Below are examples of common inspections and Central Illinois costs:

Common home inspection costs in Central Illinois:

• Whole Home Inspection: $450+ (condos are often less)
• Sewer Scope: $250–$350
• Radon Test: $125 (additional testing may be needed after mitigation)
• Well Inspection (for rural loans): $250–$500
• Septic Inspection (for rural homes): $300–$500
• Termite Inspection: Around $100

5. Buyer Agent Fees: Who Pays Your Realtor?

Before touring homes with your agent, you’ll sign a buyer representation agreement outlining how much your agent can be paid. This amount is negotiable and establishes the maximum compensation your agent can receive.

In Illinois, you can request that the seller cover your buyer agency fee as part of your purchase offer. However, the seller isn’t required to agree, so you should be prepared for the possibility of paying some or all of that fee yourself.

Not sure how buyer agency fees work or who actually pays them? I’ve created this flyer and will further explain Buyer Agency in a separate post to help you understand your options before you start looking at houses.

Why These Costs Matter

The purchase price isn’t the total cost of buying a home, and not everything can be rolled into your mortgage.

Between earnest money, inspections, appraisals, and potentially buyer agency fees, you could need several thousand dollars available before you ever reach the closing table.

And before you think, “I’ll just put it on a credit card” — please don’t!

Once you’ve applied for a mortgage, avoid taking out new loans, opening credit cards, or increasing your existing credit balances without talking to your lender first. These changes can affect your credit score, debt-to-income ratio, and potentially your loan approval.

The goal isn’t just to qualify for a mortgage. It’s to make sure you’re financially prepared for the entire homebuying process, including the expenses that come before closing day.

What Happens to Your Money if the Sale Falls Through?

Here’s something I want every buyer to understand: not every expense is refundable.

If your purchase doesn’t make it to closing, you will still be responsible for inspection fees, appraisal fees (most likely), and other services you’ve already paid for.

Your earnest money is different. Whether you receive it back depends on your purchase contract, applicable contingencies, and the circumstances surrounding the canceled transaction.

This is why understanding your contract before signing matters. A good Buyers Agent should thoroughly explain all of these items to you.

Ready to Start House Hunting?

Buying a home is exciting, but unexpected expenses can take a toll if you aren’t prepared. Take time to save a bit of money for the intial expenses. Assistance programs vary. Some can help with upfront expenses, but some can help save you money well past closing.

If you still have questions about buying a house, connect with me asn we can talk more about what to expect and how to prepare before you start looking at houses.