Hidden and Expected Costs of Buying a Home: A Budgeting Guide for Buyers

When you're getting ready to buy a home, the listing price is just one piece of the puzzle. Beyond the cost of the house itself, there are several expenses—some predictable, others less obvious—that can impact your budget. Whether you're a first-time buyer or a seasoned homeowner, having a full picture of the costs involved will help you feel more confident in your purchase.

Initial Expenses Before Closing

Down Payment

Depending on your mortgage type, your down payment could be as low as 3% or as high as 20% of the home's value. FHA loans allow for lower down payments, while conventional loans without private mortgage insurance (PMI) usually require a 20% down payment.

Earnest Money

This is a good-faith deposit submitted with your offer to show you're serious about purchasing the home. It typically ranges from 1% to 3% of the offer price and is usually credited back toward your closing costs or down payment at settlement.

Home Inspections

Even if not required, inspections are strongly recommended. A standard home inspection costs between $300 and $600, but specialized inspections for radon, termites, or mold may be additional.

Appraisal Fee

Lenders require an appraisal to make sure the home is worth the amount you plan to borrow. The typical cost ranges from $400 to $700.

Closing-Related Costs

Closing costs average 2% to 5% of the purchase price and are usually due at settlement. These fees are spread out among several services.

Loan Origination Charges

Mortgage lenders often charge a fee to process and underwrite your loan. This usually runs about 0.5% to 1% of the loan amount.

Title Services

Title search and title insurance help verify that the seller owns the home and that no liens or claims exist. This can cost between $500 and $1,500.

Attorney Fees

In states where real estate attorneys are customary or required, fees may range from $500 to $1,500 depending on the complexity of the transaction.

Escrow Prepaids

You’ll likely prepay several months of homeowners insurance and property taxes into an escrow account at closing. These costs vary significantly depending on location.

Mortgage Insurance or Funding Fees

If you're putting down less than 20%, your lender may require PMI, which adds to your monthly payment. VA loans come with a one-time funding fee that varies based on loan size and service history.

After Move-In Expenses

Moving Costs

Hiring movers, renting a truck, or even DIY moving has its costs. Plan for anywhere from a few hundred to several thousand dollars depending on how far you're going and how much you're moving.

Homeowners Insurance

Annual premiums vary based on location and home value, but expect to pay somewhere between $1,000 and $3,000 per year.

HOA Dues

If your home is in a neighborhood with a homeowners association, monthly or annual fees may apply. These fees can range from $100 to $500+ per month depending on the community and amenities.

Utility Setup Fees

Starting services for water, electricity, gas, internet, and trash removal often involves connection fees or deposits.

Ongoing Maintenance

From landscaping and HVAC servicing to plumbing fixes and appliance upkeep, regular maintenance is part of homeownership. Experts recommend setting aside 1% to 3% of your home's value each year for upkeep.

Wrap-Up: Planning Ahead Pays Off

While the cost of the home itself is your biggest line item, these other expenses add up quickly and should not be overlooked. Planning ahead and building a comprehensive home-buying budget can help you navigate the process with fewer surprises.

Need help navigating the financial side of buying a home? Reach out—I'd be happy to walk you through the process!