How a sale becomes your down payment

On paper it sounds simple: sell the old house, use the money for the new one. In practice there are three questions that decide how smoothly it goes — how much actually lands in your account, when it lands, and how you prove where it came from. Here’s the mechanics.

How much actually lands

What funds your next down payment is net proceeds, not equity. From your sale price, subtract the mortgage payoff (request the exact quote — it runs slightly higher than your statement balance), agent commissions, and closing fees, transfer taxes and any credits to the buyer — typically 8–10% of the sale price all-in. The wire that arrives from escrow is the real number to plan around.

When it lands: sequencing the two closings

The cash arrives at your sale’s closing — so the order of operations matters:

• Sell, then buy — cleanest: proceeds are in hand before you commit. The trade-off is the gap in between (short-term rental, storage, family).
• Concurrent closing — both transactions close the same day or days apart, with escrow wiring your proceeds straight into the purchase. Very doable, but it needs an agent and lender coordinating both timelines.
• Rent-back — close the sale, then rent your old home from its new owner for a few weeks. You get the cash early and a roof while you close on the next one.
• Home-sale contingency — makes your purchase offer depend on your sale. Safe, but in a competitive market it’s the weakest offer on the table.

Proving the money is yours

Lenders verify where down-payment funds come from. Sale proceeds are the easy case: unlike gifts or cash, they need no seasoning time — your signed settlement statement (Closing Disclosure) is the paper trail. Keep the wire in one account and don’t shuffle it between banks mid-process; every extra hop is another document request.

One more thing proceeds can do

A bigger down payment doesn’t just cover the purchase — crossing 20% down removes PMI, shrinks the loan, and can turn the same monthly budget into a meaningfully higher price ceiling. That’s why counting your equity is often the single biggest lift available to your Buying Power.