closing
debit
On a closing statement, a debit is an amount charged to a party, meaning money that party owes or must pay at closing. The purchase price is a debit to the buyer, and a loan payoff is a debit to the seller. Prorated items may be debited to one party and credited to the other. Debits are the opposite of credits.
- Exam tip
- Think of a debit as a charge and a credit as money received. Purchase price: debit buyer, credit seller. Earnest money: credit buyer only.
- Example
- A seller has prepaid the year's taxes. At closing, the buyer is debited and the seller credited $1,200 for the months the buyer will own the home.
Related terms & state variants
Sources
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Last verified: 2026-10-23