• Initial Deposits: Be prepared to pay 1–3% of the price as earnest money upfront and a typical 10% for a down payment if you are a first-time buyer.
• Transaction Fees: Closing costs typically range from 2% to 5% of the loan amount and can include expenses such as your appraisal, title insurance, loan origination fees and other third-party charges. Home inspections are often paid separately.
• Tax & Insurance: Plan for ongoing annual expenses, including property taxes averaging $4,427 and homeowners insurance averaging $2,424.
• Maintenance & HOA: Set aside 1% to 4% of your home’s value annually for repairs and budget $200–$400 monthly if your home is in a community with HOA fees.
• Moving & Utilities: Factor in the physical move, which can cost $500 to $10,000 depending on distance, home size and services needed, along with new monthly responsibilities for water, electricity, gas, trash and internet.

When it comes to the costs of buying a home, many prospective homeowners focus on closing costs and the mortgage payment. This is a good start, but there are many other home buying costs to consider. Learning how to factor in all upfront and ongoing expenses, as well as distinguishing your needs versus your wants, can help you make your final buying decision.

As you begin to take steps toward homeownership, here are the financial outlays for buying a house to keep in mind.

Costs of Buying a Home

Before you step into your new dream home, you'll pay several upfront costs. There are also many ongoing expenses of buying a house. Taking this information into account and gathering estimates can help you plan and budget as you move through the home purchase process.

Some of the upfront costs of buying a home include:

• Earnest money deposit
• Down payment costs
• Moving expenses
• Closing costs for homebuyers, which may include appraisal fees, title insurance, loan origination fees and other third-party charges

Some of the ongoing costs involved in buying a property include:

• Property taxes
• Mortgage fees, such as private mortgage insurance (PMI)
• Homeowners insurance
• Homeowners association (HOA) fees
• Home maintenance
• Utilities

Earnest Money Deposit

An earnest money deposit, or earnest payment, is money you pay upfront after making an offer on a home. The earnest payment, typically 1–3% of the purchase price, is paid once the buyer and seller enter into a purchase agreement. From the seller's perspective, the deposit shows you’re serious about the offer. After closing, the deposit is applied to the down payment or closing costs.

Down Payment Costs

A key factor when considering the financial outlay for buying a house is the down payment. This is the percentage of your home's purchase price that you pay upfront. For first-time buyers, the typical down payment is about 10%, while repeat buyers often put down more. A larger down payment reduces your monthly mortgage payment. However, a down payment below 20% generally requires you to pay private mortgage insurance until you reach a 20% equity level.

Moving Costs

The cost of moving depends on the size of your home, the distance of the move and the level of service you need. A local move may cost around $500 or more, while a long-distance move for a larger home can cost several thousand dollars and may reach $10,000 depending on distance, home size and services needed. Including this expense when budgeting for home purchase expenses is key.

Closing Costs for Homebuyers

Closing costs typically range from 2% to 5% of the loan amount and can include items like loan origination fees, appraisal fees, title search, title insurance, taxes, recording fees and any discount points you may choose to pay. Home inspections are often paid separately before closing, so buyers should budget for those as an additional upfront expense. Closing costs vary by state, so it’s helpful to research them in your area. Certain states have no transfer tax, while others may designate whether the buyer or seller is responsible for this cost.

Property Taxes

Property taxes are a significant ongoing cost of owning a home. The amount you pay depends on the size of your property and the local tax rate. Property taxes in the U.S. average about $4,427 annually but can range widely depending on the state, county and value of the home. A lender or real estate agent can assist in estimating the property taxes for homes in your desired area.

Homeowners Insurance

Homeowners insurance is another recurring cost to consider. The average expense in the U.S. is around $2,424 annually, though it varies depending on the property’s size, location, age, coverage level and risk factors. For homes near water or in flood-prone areas, you may also need an additional flood insurance policy.

HOA Fees

If your new home is part of a private community, there may be homeowners association fees to pay. These fees cover shared maintenance, amenities, or services. HOA fees can range from $200 to $400 per month, but they vary widely depending on the community, location, property type and amenities offered.

Home Maintenance

Maintenance is an often-overlooked aspect of home purchase expenses. A general guideline is to set aside 1% to 4% of your home’s value annually for repairs and maintenance. This can help account for repairs, upkeep, yard maintenance and larger replacement costs over time. Your costs may vary depending on the age, condition and size of your home and whether you hire professionals for the work.

Utilities

Owning a home means taking on utility bills, including gas, electricity, water, and internet. Many real estate professionals can provide utility cost estimates for properties based on previous usage, helping you better anticipate these ongoing financial responsibilities.

Consider Needs vs. Wants When Buying a Home

When weighing the costs involved in buying a property, it’s essential to separate your must-haves from your nice-to-haves. This can make it easier to establish a realistic budget. For example, you may need three bedrooms and two bathrooms but prefer to have an additional study or larger yard. Sacrificing some wants could reduce your down payment, property taxes, and maintenance costs, making the overall financial commitment more manageable.

It’s easy to focus on mortgage fees and closing costs while overlooking other expenses of buying a house. However, by proactively gathering information, consulting with your real estate agent, and working with a knowledgeable lender, you’ll gain a comprehensive understanding of the costs of buying a home. This will help you enter homeownership financially prepared and confident.

Calculating the Total Costs of Buying a Home: From Down Payments to Ongoing Expenses

Buying a home requires looking beyond the monthly mortgage payment to account for both one-time "entry" costs and recurring ownership expenses. From upfront requirements like the earnest money deposit and closing costs to ongoing responsibilities like property taxes, HOA fees, and maintenance, a complete budget is essential for long-term financial stability.

By distinguishing your "must-haves" from "nice-to-haves," you can better manage these variables and ensure your new home remains an affordable asset. Contact a loanDepot licensed lending officer today to get a detailed estimate of your total costs and start your journey to homeownership with confidence.