Here's how you calculate closing costs and the down payment when buying a home for the CE Shop National Exam

If you’ve ever bought a home or watched a closing unfold, you know one thing for sure: the numbers matter. A lot. And when a real estate math problem pops up—like the kind you see on the CE Shop National Exam—the easiest trap is assuming all the pieces you need are staring you in the face. Let me explain how to approach this kind of question so the answer actually makes sense, even if the numbers feel a little stubborn at first.

Let’s start with Nico’s scenario, because it’s a perfect microcosm of the real world. The home price is $625,000 and closing costs are 5%. Simple math, right? Five percent of $625,000 is $31,250. So far, so good. Now, here’s where the confusion tends to pop up: what about the down payment? The total money you bring to closing isn’t just the closing costs; it’s the down payment plus those closing costs. But the problem statement sometimes leaves the down payment percentage unstated, which can completely change the final figure.

What exactly goes into “closing costs”? And how does the down payment fit in?

• Closing costs are the fees you pay to get the loan and to close the deal. They can include loan origination charges, appraisal, title insurance, survey fees, recording fees, taxes, and lender credits, among other items. Some of these costs you pay at closing; others may be financed or prepaid.

• The down payment is a separate chunk of cash you put down toward the purchase price. It’s typically expressed as a percentage of the purchase price. A common target with conventional loans is 20%, but buyers often put down less or more, depending on the loan program and their situation.

In Nico’s case, we’ve nailed down the closing costs: $31,250. The total at closing, however, depends on how much Nico puts down as a down payment.

One tempting cue is the provided answer—$106,250. If you add $31,250 (closing costs) to a down payment of $75,000, you hit $106,250. That implies a down payment of 12% (75,000 ÷ 625,000 = 0.12). So, the math matches, but it rests on a down payment percentage that isn’t stated in the problem. If the standard teaching default were 20%, the total would be $156,250 (125,000 down payment + 31,250 closing costs). That would be a very different card on the table.

Here’s the key takeaway: the question is incomplete as stated if you’re asked for a single “amount to bring” without telling the down payment percentage. In tests like the CE Shop National Exam, you’ll encounter scenarios just like this. The exam writer expects you to recognize what’s missing and infer what’s assumed, or at least to flag the ambiguity and show the reasoning you’d use in real life.

So how do you navigate this in a steady, go-with-your-gut way?

A practical, real-world approach to closing funds

1. Start with the purchase price and the known costs.

• Purchase price: $625,000

• Closing costs: 5% of purchase price = $31,250

2. Identify the down payment percentage you’re prepared or qualified to make.

• If you know you’re putting down 20% (a very common scenario), your down payment is 20% of $625,000 = $125,000.

• If you’re aiming for 12%, your down payment is 12% of $625,000 = $75,000.

• If you’re exploring a 10% down or something else, you can calculate accordingly.

3. Add them up to get the total you should bring to closing.

• 20% down: $125,000 + $31,250 = $156,250

• 12% down: $75,000 + $31,250 = $106,250

• 10% down: $62,500 + $31,250 = $93,750

Notice how quickly the number shifts with the down payment. That’s the heart of this topic: closing funds aren’t a fixed sum tied only to the price of the home. They’re a composite of the price, the down payment, and the specific fees you’re paying at closing.

Why the ambiguity shows up in exams—and how to handle it

In real estate finance tests, you’ll often see a cleanly stated purchase price with a percentage for closing costs, plus one more line that’s either the down payment percentage or an assumed down payment. If the down payment piece isn’t explicit, you’ve got to decide what assumption the question is implicitly asking you to make. Here are a few strategies to handle that gracefully:

• Look for clues in the answer choices. If one option clearly aligns with a common convention (for example, a 20% down payment) but another option aligns with a lower down payment, you can test both paths quickly and see which one makes sense given the rest of the data.

• Decide on a default and state it. If you’re solving on a test, note your assumption briefly as you work. For instance: “Assuming a 12% down payment, total at closing = $106,250.” If the test wants 20%, you’ll get the other number when you adjust the assumption.

• Be mindful of extra credits or concessions. Sometimes buyers receive a seller concession or have earnest money that’s applied toward closing costs. If those credits are in play, your closing funds could be less than the simple sum of down payment plus closing costs. The problem here didn’t mention credits, but it’s a real-world wrinkle worth knowing.

A quick, relatable analogy

Think of buying a car. The price tag is $30,000, and the dealer adds $2,000 in fees (tire tax, documentation, destination charges). If you put 10% down, you’re bringing $3,000 down plus those $2,000 in fees to the table, for a total of $5,000 in “upfront costs.” If you instead put 20% down, you’re bringing $6,000 down plus the same $2,000 in fees, for a total of $8,000. The car’s price is fixed, but the total you hand over at the table changes with the down payment. Real estate works the same way, just with bigger numbers and more moving parts.

From theory to practice: what to remember for the CE Shop National Exam

• Clarity about what’s included in closing costs matters. Don’t assume every fee is nonnegotiable or nonrefundable. Some costs can be negotiated or credits can shift the final tally.

• The down payment percentage is a pivotal piece. If a problem doesn’t state it, you may need to recognize the ambiguity and explain the two plausible outcomes rather than guessing blindly.

• Practice with varied scenarios. Build a small mental toolkit: “If the down payment is 20%, total = down payment + 0.05 of price; if down is 12%, total = 12% of price + 5% of price,” and so on.

• Be comfortable with quick math. A calculator helps, but you’ll often be expected to do fast percentages in your head. 5% of $625,000 is just $31,250; 20% of $625,000 is $125,000. A good grip on these basics saves time and reduces anxiety.

A few more angles to consider

• What if closing costs aren’t 5% of the purchase price in real life? They can vary by lender, location, and loan type. Some buyers see higher origination fees, while others spot cheaper title insurance. The principle remains the same: compute closing costs first, then add the down payment.

• How about prepaid items? Taxes, homeowners insurance, and escrow reserves can appear at closing too. They aren’t always counted in the “closing costs” line you see on a bill, but they do affect the cash you need at closing. Keeping a small cushion is smart.

• The role of earnest money. If you’ve already deposited earnest money, that credit usually reduces the amount you bring to closing. It’s not an extra burden; it’s part of the larger negotiation, and you should account for it when estimating your total.

Putting Nico’s numbers in perspective

If Nico can swing a 12% down payment, the math lines up with the $106,250 figure: 0.12 × $625,000 = $75,000; plus 0.05 × $625,000 = $31,250; grand total = $106,250. If instead he aims for a conventional 20% down payment, the closing funds jump to $156,250. Neither number is wrong in itself—the right one depends on the down payment he chooses (or is qualified to make) and any credits or concessions at play.

Final thoughts: why this matters beyond a test

Understanding exactly what you bring to closing is more than a quiz skill. It’s practical money sense you’ll carry through the home-buying journey. Being precise about the down payment, closing costs, and any credits protects you from surprises at the closing table and helps you plan your finances with confidence.

If you’re taking the CE Shop National Exam or tackling similar real estate finance topics in your coursework, remember this: numbers are a story, and every chapter (purchase price, down payment, closing costs, credits) influences the ending. When a problem looks straightforward but feels incomplete, pause, map out the pieces you do know, and be explicit about what’s missing. That honesty in your work is a signal not just of accuracy, but of real-world savvy.

A quick recap for easy recall

• Closing costs are a percentage of the purchase price (in Nico’s case, 5% → $31,250).

• The down payment is a separate amount, based on a percentage of the purchase price.

• Total funds at closing = down payment + closing costs + any prepaid items minus any credits or earnest money applied.

• A single number isn’t fixed unless you know the down payment percentage or the exact credits involved.

If you’re curious to see more real-world examples like Nico’s, keep exploring the topics around the CE Shop National Exam. The more you see these numbers in different ways, the more natural they’ll feel when the moment arrives to close on a home of your own—or guide someone else through their closing. And yes, the math will still be a little stubborn from time to time, but you’ll be ready to handle it with clarity, confidence, and a calm, practiced approach.