When Is My First Mortgage Payment Due After Closing?

When Is Your First Mortgage Payment Due?

When your first mortgage payment is due depends on the date selected as your loan's closing date. Regardless of when in the month you close, mortgage payments begin at the start of the second month after closing. That's because mortgage payments are made in arrears. That means that, unlike rent, you pay for the month prior rather than the month that's beginning.

First Mortgage Payment Due Date Example

To help explain how the date you close impacts your first payment due date, consider what happens when you close on a home at the end of a month—say, March 27. In this case, you'll owe nothing the first full month (April) and your first payment will be due at the start of the second month, or May 1 in this case. This gives you only about a month after closing before your first payment is due.

On the other hand, if you were to wait a few days and close April 3, you'd owe nothing during April or May, so your first mortgage payment would be due June 1. By closing at the start of a month, you get closer to two months before your first payment comes due.

Learn more: The Ultimate Guide for First-Time Homebuyers

When Is the Best Time to Close on a House?

The best time to close on a house depends on your personal financial circumstances. Broadly speaking, closing at the beginning of a month provides more financial cushion. It also gives you more time to end your lease—and hopefully avoid paying rent for the same month your first mortgage is due.

Your closing date doesn't just affect when your first mortgage payment is due, but how you'll have to budget for your housing payments during this transitional time.

If you close late in a month and end up with less time before your mortgage payment is due, it could put your budget in a crunch since you'll likely also need cash flow for movers, furniture and other expenses. Additionally, if you've been renting, you may not be able to avoid paying rent and your mortgage in the same month.

Learn more: Expenses to Budget for in the First Year of Homeownership

How Your First Mortgage Payment Affects Costs

Wondering if there is a cost to delaying your first mortgage payment? The answer is yes and no.

Regardless of when you close, and whether your first payment is due one or two months after closing, your first payment amount will be the same. What is impacted by a later first payment is your closing costs.

When your first mortgage payment gets pushed further out—meaning closer to two months after closing than one—you're not actually skipping a payment. You're responsible for the loan's interest and property taxes as soon as you close. So, if your first payment is later, the interest must be prepaid and included in your closing costs.

Here's the tradeoff: You can delay your first full mortgage payment, at the expense of paying higher closing costs—which may be preferable if you're rolling closing costs into the loan. The timing of closing just dictates whether you'll pay what's owed a month after closing or at closing itself if your first mortgage payment won't occur for two months.

Both options will impact your budget, just in different ways. You may be able to negotiate the closing date if one option is better for you.

How to Prepare for Your First Mortgage Payment

Money could be tight in the first month after you close, especially when you factor in moving expenses, closing costs and the possibility of owing a final payment on your last home in addition to a first payment on your new one. Here are some ideas to help you prepare.

• Time your closing. There's not a right or wrong way to time your closing. It all comes down to analyzing your budget and current housing situation, and ensuring you are prepared financially. If you close at a time that delays your first mortgage payment, you lighten the load on your budget for housing, but you will face higher closing costs, so make sure you're prepared for how to handle this situation.
• Cut back discretionary spending. You may need to cut back on discretionary spending during the first month's transition, especially if you'll end up owing two housing payments in the same month.
• Save ahead for your first payment. If you've been setting aside money monthly for rent or down payment savings, your budget may already be prepared for your new mortgage payment.
• Start a budget. If your mortgage payment will be a new or larger-than-usual expense, it's the perfect time to update or create a budget. Experiment with various budgeting strategies to find the one that works best for your needs and personality.

Learn more: Tools to Help You Navigate the Homebuying Process

Frequently Asked Questions

The Bottom Line

Planning ahead for your first mortgage payment can help you avoid feeling pinched in those first months of homeownership, when expenses can be higher than usual. Plus, setting yourself up on a budget helps ensure you can make your mortgage payments on time each month. That's not only critical for keeping your home and avoiding foreclosure, but for maintaining a good credit score and financial health. Check your FICO^® Score^☉ for free to see where you stand now.