To pay for a house in cash, you show the seller proof that you have the money, submit an offer backed by earnest money, handle your own inspection and title work, and wire the balance to the closing agent’s escrow account on closing day. “Cash” here means no mortgage, not a suitcase of bills. Nearly every cash buyer funds the purchase with a single wire transfer from a bank or brokerage account, and the closing can wrap up in two to three weeks because no lender is underwriting the deal.
Proving You Have the Funds
Sellers won’t take a cash offer seriously without proof you can actually close. A proof-of-funds document does the work: a recent bank or investment statement showing your name, the account balance, and a date within the last 30 days, with a balance large enough to cover the purchase price and expected closing costs. Your bank can also issue a formal proof-of-funds letter on its letterhead.
The title company or closing attorney will separately ask where the money came from. This “source of funds” review helps them comply with federal anti-money-laundering requirements. Have historical bank statements, investment liquidation records, or documentation of an inheritance or business sale ready in advance. A large recent deposit with no paper trail is the kind of thing that stalls a closing while the title company asks for more.
Making the Offer and Putting Down Earnest Money
A cash offer carries weight because there is no financing contingency and no lender appraisal to clear. You can also offer a faster timeline than the roughly 41 days a financed purchase takes on average, since there is no loan underwriting.
With your offer you’ll submit earnest money, a deposit showing you’re serious. Earnest money typically runs 1% to 2% of the purchase price. It sits in an escrow account and is applied to the purchase price at closing.
Due Diligence You Still Need
With no lender in the picture, no one is going to require you to inspect the property, insure it, or buy title insurance. A lender would require all three to protect its collateral. You are now the one with the collateral.
- A home inspection can surface structural problems, bad wiring, roof damage, or hidden water intrusion that could cost tens of thousands to repair. Without a lender mandating one, the choice is yours, but you’re betting the full purchase price on a property you may not fully understand.
- A title search confirms the seller legally owns the property and that no outstanding liens or claims exist. An owner’s title insurance policy protects you if a problem surfaces later, such as an undisclosed heir, a forged document in the chain of title, or an unpaid contractor’s lien. The policy covers you for as long as you own the home.
- Homeowners insurance covers property damage and personal liability if someone is injured on the premises. On an uninsured property you paid cash for, a fire, storm, or lawsuit comes entirely out of your own pocket.
Protecting Your Wire From Fraud
Wire fraud is the single biggest financial risk in a cash home purchase. Criminals break into email accounts belonging to agents, title companies, or attorneys, then send the buyer fake wiring instructions that redirect the purchase funds to an account they control. Once the money leaves, recovery is extremely difficult.
- Pick up wiring instructions in person from the title company or closing attorney when you can, rather than relying on email.
- If instructions arrive electronically, call the title company at a number you already have on file — not one printed in the email — and confirm every digit before sending funds.
- Treat any last-minute change to bank account details as a red flag. Legitimate title companies rarely switch accounts right before closing.
- After wiring, call the title company at a known number to confirm the funds arrived in the correct account.
Closing Day: Moving the Money and Taking Title
On closing day, you wire the remaining balance, after subtracting earnest money, from your bank to the title company or escrow agent. Banks often require you to initiate a large wire in person or through a secure online portal with multi-factor authentication. Some buyers deliver a cashier’s check to the closing office instead.
Once the funds are verified, you sign a settlement statement that itemizes the purchase price and every closing cost. Cash transactions are not subject to the HUD-1 or Closing Disclosure forms that apply to federally related mortgage loans.1eCFR. 12 CFR 1024.8 – Use of HUD-1 or HUD-1A Settlement Statements The title company or closing attorney prepares its own settlement statement covering the same information.
The seller signs a warranty deed or grant deed, depending on your state, transferring ownership to you. The closing agent records the deed with the local government office, which puts the transfer on the public record. You now own the property free of any mortgage lien.
Closing Costs to Budget For
You skip lender charges like origination fees and mortgage insurance, but several costs remain. Budget roughly 1% to 3% of the purchase price to cover them.
- Title search and owner’s title insurance.
- Recording fees charged by the local government to record the deed transfer.
- Transfer taxes or deed stamps, which vary by jurisdiction; some states and localities charge a percentage of the sale price.
- Real estate attorney fees. Roughly seven states require a lawyer at closing, and buyers in other states often hire one anyway to review documents for a large purchase.
- Home inspection, typically a few hundred dollars depending on the size and age of the home.
- Prorated property taxes and HOA dues, reimbursing the seller for amounts already paid for the period after closing.
Federal Reporting Rules That May Touch Your Closing
Three federal rules can come into play. Most buyers wiring funds in their own name will only encounter one of them, if any.
IRS Form 8300. Any business receiving more than $10,000 in cash in a single transaction must file IRS Form 8300 within 15 days.2Office of the Law Revision Counsel. 26 USC 6050I – Returns Relating to Cash Received in Trade or Business3eCFR. 31 CFR 1010.330 – Reports Relating to Currency in Excess of $10,000 Received in a Trade or Business For this form, “cash” means physical currency plus certain monetary instruments like cashier’s checks, money orders, and bank drafts with a face value of $10,000 or less when used in a real estate transaction. Wire transfers are not cash under these rules.4Internal Revenue Service. Form 8300 Reference Guide If you fund your purchase by wire, Form 8300 generally does not apply. If any portion of the price is paid in physical currency or in multiple cashier’s checks of $10,000 or less, the title company or escrow agent must file it, and will ask for your name, address, date of birth, and Social Security or taxpayer ID number. Deliberately splitting payments to stay under $10,000 is a federal crime called structuring.
FinCEN beneficial ownership reporting. Effective December 1, 2025, a separate federal rule requires the closing agent to report information to the Financial Crimes Enforcement Network whenever residential property is transferred without traditional financing to a legal entity such as an LLC or to a trust, including the identities of the beneficial owners behind the entity.5Financial Crimes Enforcement Network. Residential Real Estate Transfers Fact Sheet6Federal Register. Anti-Money Laundering Regulations for Residential Real Estate Transfers If you buy as an individual in your own name, this rule generally does not apply.
FIRPTA withholding on foreign sellers. If the seller is a foreign person or entity, you as the buyer are responsible for withholding 15% of the amount realized on the sale and remitting it to the IRS under the Foreign Investment in Real Property Tax Act. An exemption applies if you’re acquiring the property as your personal residence and the price is $300,000 or less.7Internal Revenue Service. FIRPTA Withholding If withholding was required and you failed to do it, the IRS can hold you personally liable for the tax. Your closing agent can help determine whether the seller qualifies as a foreign person.
The Tax Trade-Off of No Mortgage
Paying cash eliminates the mortgage interest deduction. Homeowners who itemize can deduct interest on up to $750,000 of mortgage debt, or $375,000 if married filing separately, used to buy or improve a qualified home.8Internal Revenue Service. Publication 936 – Home Mortgage Interest Deduction With no mortgage, that deduction is gone.
In practice, the deduction only helps if your total itemized deductions exceed the standard deduction. For the 2026 tax year, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.9Internal Revenue Service. Tax Inflation Adjustments for Tax Year 2026 Many homeowners already take the standard deduction, so losing the mortgage interest write-off may not change their tax bill.
Regardless of how you pay, you can still deduct state and local property taxes up to $10,000 per year, or $5,000 if married filing separately, as long as you itemize.10Internal Revenue Service. Potential Tax Benefits for Homeowners