What payment may lenders require at closing?

Lenders often require a payment of interest for the remaining days of the month at closing. This is because interest is typically calculated on a daily basis, and when a loan closes partway through a billing cycle, the borrower is responsible for paying the interest that accrues from the closing date until the end of the month. This ensures that the lender receives payment for the time period in which they have provided the loan funds before the first full monthly payment is due.

In many cases, the other options do not apply universally across all lenders or loan types. For instance, while a down payment of 20% might be common depending on the loan requirements or type of mortgage, it isn't universally mandated for every closing. Similarly, full closing costs upfront or monthly payments for the first year are not typical requirements; closing costs are often rolled into the loan or paid separately, and monthly payments are structured according to the mortgage schedule rather than requiring upfront payment for an entire year.