How Much Money Do You Need to Buy a $500,000 House?

Down payment scenarios

Your down payment is the biggest single number — and the one with the most options. Conventional loans through Fannie Mae allow as little as 3% down; FHA loans 3.5% at a 580+ credit score; VA loans 0% for eligible borrowers. Anything under 20% on a conventional loan adds PMI. Here is how each choice plays out on a $500,000 home at 6.58% over 30 years:

Principal & interest only, at the Freddie Mac PMMS 30-year average (6.58%, week of July 23, 2026). Taxes, insurance, and mortgage insurance are added on top. Down-payment minimums per Fannie Mae and HUD/FHA.

Closing costs

The CFPB says buyer closing costs typically run 2%–5% of the purchase price. On a $500,000 home that is about $10,000 to $25,000, with a rough midpoint near $15,000. These are separate from your down payment and cover lender origination, appraisal, title insurance, government recording and transfer taxes, and prepaid escrow items (property taxes, homeowners insurance, and interest to month-end). Transfer taxes and title pricing vary a lot by state — estimate the total with our closing costs calculator.

Earnest money

When your offer is accepted, you put down earnest money — a good-faith deposit typically 1%–3% of the price, about $5,000–$15,000 on a $500,000 home (more in competitive markets). This is not an extra cost: it is held in escrow and credited toward your down payment and closing costs at settlement. You do, however, need it available earlier than closing day, so count it as cash you must have on hand up front.

Cash reserves lenders expect

Lenders look at reserves — money left after closing, measured in months of full payment (PITI). For a primary residence the required amount is often zero (it is set by automated underwriting), but reserves strengthen your application and are firmly required elsewhere: Fannie Mae's Selling Guide requires 6 months of reserves on investment properties. Whatever the requirement, buying with no cushion is risky. A sensible target is a few months of payments plus an emergency fund — on top of your cash to close.

First-year costs people forget

The cash need does not stop at the closing table. Budget for:

• Maintenance and repairs — a common rule is about 1% of the home's value a year, roughly $5,000 on a $500,000 home.
• Moving — professional movers, deposits, and time off.
• Immediate furnishings and fixes — appliances, window coverings, and the small emergencies of a new place.
• Utility setup and HOA dues — connection fees and any first HOA payment.

When each dollar is actually due

The cash does not all come out at once, and knowing the sequence helps you keep it liquid at the right moments:

• At offer acceptance — earnest money ($5,000–$15,000) goes into escrow within a few days. You need it liquid now, not at closing.
• During the process — the appraisal and home inspection are usually paid out of pocket up front (roughly $300–$600 each), before closing.
• Three days before closing — your Closing Disclosure states the exact cash to close. Confirm the wire details directly with the settlement agent to avoid wire fraud.
• At closing — the balance (down payment plus remaining closing costs, minus your earnest deposit and any credits) is wired or brought as a cashier's check.

How rates change these numbers

The cash to buy a $500,000 home barely moves with interest rates — your down payment and closing costs are set by the price, not the rate. What the rate changes is the monthly payment, and therefore how much house you can carry. At the current Freddie Mac 30-year average of 6.58%, the monthly principal and interest on this home ranges from $2,549 (20% down) to $3,091 (3% down) in the table above. If rates fall, that payment drops for the same cash outlay; if they rise, it climbs. Because the payment — not the upfront cash — is usually what stretches a budget, size it first with our affordability calculator and model the exact figure on the mortgage calculator.

The bottom line: cash to close

Your cash to close is the down payment plus closing costs (earnest money is already counted inside it). Using a 3%-of-price closing estimate on a $500,000 home:

Illustrative: assumes closing costs at the 3% midpoint of the CFPB's 2%–5% range. Reserves and first-year costs are additional. Your Loan Estimate is the authoritative figure.