Can the UMB Closing Cost Credit Cover Your Closing Costs?
By Joe Nelson, Retired Air Force, Nelson Home Group Team Leader and Mortgage Loan Originator
The UMB closing cost credit can cover eligible closing costs and prepaid items up to the assistance available for your purchase. It may leave a qualifying buyer with very little due at closing, especially alongside zero-down financing. Your actual costs determine whether the credit covers them all. [B1]
My team can help you build a cash plan for an actual home, including the money you may need before closing day.
How much could the UMB closing cost credit provide?
UMB’s Missouri and Kansas terms describe up to a 2% lender credit toward closing costs and prepaid items.
UMB describes potential assistance of up to 2% toward eligible closing costs and prepaid items. For an illustrative $300,000 purchase financed in full, 2% equals $6,000. UMB applies the credit to allowable costs; any expenses left uncovered remain your responsibility. [B1]
That example explains why this program can change a first-time buyer’s plans. If the down payment is covered through full-purchase financing and the credit covers much of the remaining transaction expenses, the amount you need can be very different from the savings target you assumed.
To evaluate the UMB closing cost credit, start with the lender’s estimate for the property. Use the credit UMB offers for that purchase when you calculate what cash you need.
What would the credit change in an illustrative purchase?
It reduces eligible costs dollar for dollar until the available credit or allowable expenses are exhausted. The following examples use assumed eligible expenses solely to show that calculation. They are not Kansas City closing-cost estimates or lender quotes.
| Illustrative purchase financed in full | Assumed eligible costs | Assumed available credit | Eligible costs still uncovered |
|---|---|---|---|
| $300,000 | $6,000 | $6,000 | $0 |
| $300,000 | $8,000 | $6,000 | $2,000 |
Source: arithmetic using the illustrative assistance amount and explicitly assumed expenses. No seller contribution, deposit adjustment or cost paid before closing is included.
The table is one part of the cash calculation. Your Loan Estimate also accounts for the down payment, deposits already paid and applicable credits or adjustments. Your title company and lender reconcile the final transaction. [C2]
Make each dollar do one job in the budget. A deposit you already paid should not be counted as both a new bill at closing and an additional credit you can spend elsewhere.
Which costs can remain when there is no origination fee?
Earnest money and inspections can come due weeks before the closing appointment.
Title services, recording charges, insurance and other transaction expenses can remain. No application or origination fee is a valuable feature, but it does not remove charges for services performed by other parties. [C2]
Prepaid items and the initial escrow deposit also deserve attention. These amounts can affect the cash needed even though they serve a different purpose from a lender service charge. My existing guide to mortgage prepaids and escrow deposits explains those categories in detail.
You do not need to memorize a closing statement. You need a working estimate that makes the purchase possible without emptying the account you will use after moving in.
What money might you need before the closing appointment?
Plan for the timing of earnest money, inspections and any other charges due before closing. The amount and due date depend on your contract, service providers and lender. A low final cash-to-close figure does not describe the balance you need available throughout the transaction. [C2]
Ask when each payment is due and how it will appear in the final accounting. Some expenses may already be paid by closing day. That can reduce what is collected at the appointment while leaving a real earlier cash outlay.
Put the due date next to the dollar amount. A purchase budget becomes useful when you can see what must be paid from signing the contract through receiving the keys.
Can seller-paid costs help close a remaining gap?
Seller-paid costs can help only when the seller agrees and the loan allows the contribution.
They can help when the seller agrees and the loan permits the contribution. The property’s negotiating situation matters. I am seeing some homes where there is room to discuss price and closing costs, but that is an opportunity to assess on the actual listing.
My team can help structure a request around the cash gap the lender has identified. That is more useful than asking for the largest possible contribution without knowing which costs remain.
The offer still needs to make sense as a whole. A seller may respond differently to a price change, a credit request or a closing date. We can discuss those tradeoffs before you commit to terms.
How should you build your cash plan before making an offer?
Separate expenses into money due before closing, money estimated due at closing and savings you want left afterward. Then have the lender show how the assistance applies to the chosen property.
Use the estimate to answer a practical question: can you complete this transaction and still feel comfortable owning the house? Monday’s program guide, Searching for a First Time Home Buyer Grant in KC With No PMI?, explains why I recommend pricing this option. This article handles the credit and timing of your cash; the existing Kansas City buying-cost guide covers the broader expense categories.
Keep a reserve after you get the keys. Spending less upfront is most useful when it also gives you room to handle ownership.
Frequently Asked Questions
Is the example a guaranteed $6,000 benefit?
No. The $6,000 figure is 2% of an illustrative $300,000 purchase financed in full. UMB describes potential assistance for qualifying buyers, and the credit is applied to eligible costs. Your actual benefit depends on the transaction and the bank’s determination. Use the lender’s estimate for your purchase instead of assuming the maximum.
Can I combine the UMB credit with seller-paid closing costs?
Have UMB confirm the combination before we write your offer. The bank needs to identify which costs each credit can cover and any contribution limits that apply to the loan. My team can then structure a seller request around the remaining cash gap. A seller contribution helps when the seller agrees and the financing allows it.
Does a low cash-to-close figure include what I already paid?
It may account for deposits or charges paid earlier, which is why timing matters. Review the lender’s calculation and ask how each earlier payment is reflected. Add the money needed before closing to your planning calendar, rather than assuming a small amount due at the appointment means the entire transaction required that same amount.
What cash should I plan to have before closing?
Plan for earnest money, inspections and any other charges due before the closing appointment. Ask when each payment is due and how it will appear in the final transaction accounting. UMB applies the closing-cost credit to eligible expenses, so a small amount due at closing does not tell you how much cash you need available earlier.
Ready to Talk?
If you can handle a payment but saving for the purchase has kept you renting, let’s work out the actual cash gap. My team can help you connect the financing estimate, the offer terms and the money you want left after moving.
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