The Real Costs of Buying a Home: What You Need to Budget For

by Heather Stout

The Real Costs of Buying a Home: What You Need to Budget For

Buying your first home is exciting—but it can also come with unexpected expenses if you’re not prepared. Most buyers focus on the down payment, but that’s just one piece of the financial puzzle. To avoid surprises and feel confident at the closing table, it’s essential to understand the full range of costs involved in the home-buying process.

Here’s a breakdown of what to expect when budgeting for your first home:

1. Down Payment

This is the amount you’ll pay upfront toward the home. While 20% is often mentioned, many loan programs—such as FHA, USDA, and VA—require much less:

FHA loans: As low as 3.5%
Conventional loans: As low as 3% for qualified buyers
VA/USDA loans: May offer 0% down for eligible buyers

2. Closing Costs

Closing costs typically range from 2% to 5% of the home’s purchase price and cover everything from title fees to attorney fees.

These may include:

Loan origination and underwriting fees
Title search and title insurance
Attorney fees (where applicable)
Recording and transfer fees
Prepaid taxes and homeowners insurance
Escrow deposits
Some sellers may contribute to closing costs, but it’s important to budget as if you’ll cover them.

3. Home Inspection and Appraisal

Home inspection: $300–$600 depending on size and location
This is a must to ensure the home is structurally sound and free from hidden problems.
Appraisal: $400–$700
Lenders require this to confirm the home’s value supports the loan amount.

4. Moving Expenses

Moving costs vary widely depending on distance, how much you’re moving, and whether you hire professional movers or DIY.

Expect:

Local moves: $500–$1,500
Long-distance moves: $2,000+
Don’t forget utility deposits, new furniture, or storage fees.

5. Immediate Repairs or Upgrades

Even a move-in ready home might need a few touches—painting, new locks, or appliance upgrades. Set aside at least a small reserve fund ($1,000–$2,000) for immediate needs post-move.

Final Thoughts

Knowing what to expect financially allows you to approach the buying process with confidence. The last thing you want is to fall in love with a home, only to realize you're not quite ready to afford the full cost of ownership.

If you’re unsure how to budget or want help estimating costs for your specific situation, I’d love to guide you through it step by step. Let’s find the home that fits your lifestyle and your budget.