Buying a house outright is legal, increasingly common among buyers with enough liquid assets, and usually faster than a financed purchase: a cash deal can close in one to two weeks rather than the 30 to 60 days a mortgage takes. The process still has real steps. You need a proof-of-funds letter, a title search, an owner’s title insurance policy in most cases, a wire transfer to escrow, and awareness of a narrow set of federal reporting rules. The rest of this walks through each stage in the order it actually happens.
What You Gain and What You Give Up
The biggest gain is interest. Over a 30-year mortgage, interest payments can exceed the original loan amount, and paying upfront removes that cost entirely. You also skip lender-driven fees: loan origination charges, the appraisal a bank requires, and private mortgage insurance. Sellers tend to prefer cash offers because there is no lender who could deny financing at the last minute, so the deal is less likely to collapse.
The trade-off is opportunity cost. Money locked in home equity earns no investment return, and a buyer who could invest that capital elsewhere may forgo growth that would have outpaced the mortgage rate. You also lose the mortgage interest deduction on your federal return, because that deduction applies only to interest paid on a loan secured by the home.1Internal Revenue Service. Publication 936, Home Mortgage Interest Deduction If you are in a high tax bracket and would itemize, run that number before committing.
Proof of Funds
Before you make an offer, you need a proof-of-funds letter from your bank confirming you hold enough liquid assets to cover the purchase price. The letter should show the bank’s name, your name as account holder, and the current balance. Most sellers expect it to be dated within 30 days of the offer.
You can request the letter from a bank officer or download a certified version through your bank’s online portal. Investments held as stocks or bonds in a brokerage account generally will not qualify on their own; you would have to liquidate them first and move the proceeds into a bank account. Retirement accounts carry the same limitation, plus possible taxes and early-distribution penalties on the withdrawal.
Immediate access is the point. Sellers accept cash offers because the money is confirmed and ready to move, and once your offer is accepted you may need to wire the full amount within about two weeks.
Making the Offer and Earnest Money
Your offer takes the form of a purchase agreement stating the total price, the legal description of the property from county records, and any contingencies. In a cash deal you typically drop the financing contingency, which is a large part of why cash offers get accepted. You can still keep contingencies for a satisfactory inspection and for clear title.
Along with the offer, you deposit earnest money as a good-faith payment. Deposits generally run 1 to 10 percent of the price. In competitive markets, 5 to 10 percent helps an offer stand out; in slower markets, 1 to 2 percent is common. Some areas use flat amounts, often between $5,000 and $10,000, regardless of price. The deposit sits in escrow and is applied to the purchase price at closing. If the deal falls through for a reason covered by one of your contingencies, you typically get it back.
Title Search and Title Insurance
Once your offer is accepted, a title professional reviews public records for outstanding liens, judgments, and other claims against the property. The search produces a preliminary title report confirming whether the seller can legally transfer ownership. Anything found, such as unpaid property taxes, a contractor’s lien, or a boundary dispute, must be resolved before closing.
You should also buy an owner’s title insurance policy. A mortgage lender would require a separate lender’s policy, and cash buyers face no such requirement, but skipping owner’s coverage means you absorb the full risk of any ownership defect that surfaces later. The premium is a one-time cost at closing, generally between 0.4 and 1 percent of the purchase price, depending on state and property value. Some states regulate the premiums and set fixed rates.
The remaining paperwork includes the deed transferring ownership, a closing disclosure or settlement statement itemizing costs, and any state transfer tax forms. Names on the deed and closing documents must match your government-issued ID exactly, or the county recorder’s office may reject the filing.
Inspections and Appraisals Without a Lender
A financed purchase forces an appraisal and usually an inspection. A cash purchase forces neither, but waiving them shifts every hidden problem onto you.
A standard home inspection covers structural integrity, electrical, plumbing, roofing, HVAC, ceilings, walls, windows, and insulation. Cost typically runs $300 to $800, which is small next to a $5,000 to $10,000 repair bill for something like a failed HVAC system or a compromised foundation. If the inspector finds significant problems, you can negotiate a price reduction or ask the seller to make repairs before closing.
A voluntary appraisal answers a different question: are you overpaying? An independent appraiser compares recent sales of similar homes to estimate market value. If the appraisal comes in below your offer, you have grounds to renegotiate. A few hundred dollars on an appraisal is cheap insurance against tying up hundreds of thousands in an overpriced house.
When Federal Reporting Applies
Paying without a mortgage does not by itself trigger federal reporting. A few specific situations do, and it helps to know which apply to you and which don’t.
Physical Currency Over $10,000
Under the Bank Secrecy Act, a business that receives more than $10,000 in physical currency in a single transaction, or in related transactions, must file IRS Form 8300.2Internal Revenue Service. IRS Form 8300 Reference Guide Wire transfers, personal checks, and ACH payments do not count as “cash” for this rule.3Internal Revenue Service. Report of Cash Payments Over 10000 Received in a Trade or Business Motor Vehicle Dealership QAs Since most “cash” home purchases actually move by wire, Form 8300 usually does not come up. It applies only if you are literally paying in bills or with certain instruments like cashier’s checks bought with cash.
Separately, your bank files a Currency Transaction Report automatically for any physical currency deposit or withdrawal over $10,000 in a single day.4Financial Crimes Enforcement Network (FinCEN). Notice to Customers: A CTR Reference Guide You do not need to do anything, but never break a large deposit into smaller amounts to duck the report. That practice, called structuring, is itself a federal crime.
Purchases Through an LLC or Trust
If you buy through a limited liability company, corporation, partnership, or trust rather than in your own name, a separate rule applies. Starting March 1, 2026, FinCEN’s Residential Real Estate Rule requires the settlement or title agent to file a report with FinCEN for any non-financed residential real estate transfer to a legal entity or trust.5Financial Crimes Enforcement Network (FinCEN). Residential Real Estate Rule There is no minimum purchase price; the rule applies regardless of the property’s value.6Financial Crimes Enforcement Network (FinCEN). Residential Real Estate Fact Sheet Purchases made directly by an individual, not through a legal entity or trust, are not covered.
Wiring the Funds and Closing
The purchase price typically moves by domestic wire transfer from your bank to the title company’s or escrow agent’s account. Your bank needs the receiving institution’s ABA routing number and account number for a domestic wire; SWIFT codes are used only for international transfers. Confirm the wire instructions directly with the title or escrow company using a phone number you already have on file, not one pulled from an email.
Wire fraud aimed at real estate closings is a serious and growing problem. Criminals hack email accounts and send buyers convincing but fraudulent wiring instructions, redirecting the entire purchase price to a thief’s account. Verify all instructions by phone or in person. Be suspicious of any last-minute change to wire details that arrives by email or voicemail. Once a wire lands in the wrong account, recovering the funds is extremely difficult.
After the title company confirms it has the funds, you and the seller sign the final closing documents. The settlement statement accounts for the purchase price, prorated property taxes, recording fees, and any other costs. The title agent then submits the deed to the county recorder’s office, and it becomes part of the public record. You typically receive the recorded deed by mail several weeks later. Possession of the property usually transfers immediately after closing.
Closing Costs You Still Pay
Skipping the mortgage cuts out loan origination charges, discount points, and the required lender’s title insurance policy. Several closing costs remain:
- Owner’s title insurance: a one-time premium, generally 0.4 to 1 percent of the purchase price.
- Title search and examination fees, often bundled with the title insurance order.
- Deed recording fees charged by the county, varying by jurisdiction and often based on document length or a flat rate.
- Transfer taxes, imposed by most states, running from about 0.1 percent to over 2 percent of the sale price. Some states split the cost between buyer and seller; others assign it to one party by custom or law.
- Escrow or settlement fees charged by the title or escrow company for managing closing.
- Prorated property taxes, either reimbursing the seller for taxes already paid past the closing date or receiving a credit for taxes owed before it.
- Any home inspection ($300 to $800) or voluntary appraisal, typically paid before closing.
Cash buyers save meaningfully on closing costs compared with mortgage buyers, but the remaining items can still total several thousand dollars depending on price and location.
Ongoing Costs After You Own It
Owning free and clear removes the monthly mortgage payment, but recurring costs continue, and without a lender running an escrow account, you pay each one directly.
Property Taxes
Local governments assess property taxes annually, and missing a payment can create a tax lien on your home. Prolonged delinquency can lead to a tax sale. Many states offer homestead exemptions that reduce the taxable value of a primary residence, lowering the annual bill. Eligibility rules, exemption amounts, and application deadlines vary by state, so check with your county assessor’s office after closing.
Insurance
No lender is requiring homeowners insurance, but going without it exposes your entire investment to fire, storms, theft, and liability claims. Consider an umbrella liability policy as well. With significant equity and no mortgage balance offsetting it, a lawsuit over an accident on your property could reach that equity, and umbrella coverage is relatively inexpensive for what it protects.
HOA Fees, Maintenance, and Utilities
If your property sits inside a homeowners association, dues remain due whether or not you have a mortgage. Falling behind on HOA payments can result in liens and in some cases foreclosure by the association. Beyond dues, all maintenance, repairs, and utilities (water, electricity, waste, and anything else billed by your municipality or private providers) fall to you. Automatic payments or a dedicated account for these recurring bills keeps anything from slipping through.