What do you pay before closing day?

Buyers plan for the down payment and hear about closing costs. The costs in between are the ones that catch people off guard, mostly because they are due within days of the offer being accepted. Here is what to expect and when.

Earnest money

A deposit that shows the seller you are serious. It is credited back to you at closing.

Earnest money goes with your signed contract, typically to the title company, within a few days of the seller accepting. It is commonly a small percentage of the purchase price, though the amount is negotiated in the offer and can be higher in competitive situations. At closing it is applied toward your down payment and closing costs. If the deal ends inside a contingency the contract allows, such as financing or inspection, it is usually returned. If you walk away outside those windows, the seller may keep it, which is why your agent watches those dates carefully.

Source: Consumer Financial Protection Bureau, "What is earnest money?" consumer guidance (2026).

The option fee

In Texas, a small payment to the seller that buys you the right to back out for any reason during the option period.

The option period is a set number of days, negotiated in the contract, when you inspect the home and decide whether to move forward. The option fee is paid directly to the seller within a few days of acceptance and is usually credited to you at closing if the sale goes through. Other states handle the same idea differently, often through a due diligence fee or an inspection contingency, so if you are buying outside Texas, ask your agent how your contract works.

The home inspection

Paid to the inspector on the day of the inspection, not at closing.

A general inspection covers the roof, foundation, electrical, plumbing, HVAC, and the major systems. It is not required by the lender, but it is the only step in the whole process that tells you what you are actually buying. Some homes call for extra inspections, such as a termite report, a sewer scope, or a pool inspection, and some loan programs require specific ones. Each is paid separately, usually the same day it happens.

The appraisal

Ordered by the lender, paid by the buyer, usually up front.

Once you are under contract, the lender orders an appraisal from an independent appraiser to confirm that the home's value supports the loan. You typically pay for it when it is ordered. If the appraisal comes in below the contract price, your agent and loan officer walk you through the options, which can include renegotiating, covering the difference, or in some cases walking away under the contract's terms.

How is this different from closing costs?

Closing costs are the lender fees, title fees, and prepaid taxes and insurance paid at the closing table, and they are itemized on your Closing Disclosure. The costs in this article come earlier, during the contract period, and most are paid directly to a third party. Your loan officer can walk you through both sets of numbers for a specific property before you write the offer, so nothing is a surprise. For the full sequence from contract to keys, see our home buying timeline.

Frequently asked questions

Do I get my earnest money back?

Usually yes. At closing it is credited toward your down payment and closing costs. If the contract falls through inside the periods the contract allows, it is typically returned. Walk away outside those periods and the seller may keep it.

What is the option fee in Texas?

A small payment to the seller that buys you an option period, a set number of days when you can inspect the home and back out for any reason. It is a Texas contract feature. Other states use a similar due diligence fee or inspection contingency.

Is the inspection required?

Lenders do not require a general inspection, but nearly every experienced buyer gets one. It is the only step that tells you the condition of the home before you own it. Some programs require specific inspections, such as a termite report.

Who orders the appraisal?

The lender orders it, from an independent appraiser, and the buyer typically pays for it up front. It confirms the home's value supports the loan.

Are these the same as closing costs?

No. Closing costs are the lender, title, and prepaid items paid at the closing table. The costs in this article come earlier, during the contract period, and most of them are paid directly to a third party.

Disclaimer: This article is for general educational purposes only and is not financial advice, legal advice, a commitment to lend, or an offer of credit. Contract terms, fees, and timelines vary by state, by contract, and by property. Consult your real estate agent and loan officer about your specific transaction. Warens Financial Group, NMLS #2532048. Equal Housing Opportunity. Warens Financial Group, NMLS #2532048. Franklin Warens, Mortgage Broker, NMLS #1249423. Equal Housing Opportunity.