Buying a home is one of the biggest financial decisions you’ll ever make. The purchase price, however, is only the starting point. Between the moment you sign the offer and the first year of ownership, a string of costs will appear that many first-time buyers never anticipated. I’ve seen buyers drain their savings on the down payment and then scramble to cover the rest. The fix is simple: plan ahead. Here are 20 expenses every home buyer should budget for, grouped by the stage of the process so you can see exactly where the money goes.
Before You Make an Offer: The Up-Front Costs
1. Earnest Money Deposit
When you make an offer, you typically put down 1% to 3% of the purchase price in earnest money to show the seller you’re serious. This isn’t an extra cost if the deal goes through—it’s credited toward your down payment or closing costs. But if you back out for a reason not covered by your contract, you could lose it. On a $300,000 home, that’s $3,000 to $9,000 that needs to be in your account before you even have a signed contract. As outlined in the step-by-step home buying process, this deposit is expected within days of acceptance.
2. Home Inspection Fee
A standard home inspection costs $300 to $500. It’s money well spent. A thorough inspector will check the roof, foundation, electrical, plumbing, and more. If they find major issues, you might need additional specialized inspections, like for mold or radon, which each run $200 to $500. These aren’t optional if you want to avoid a money pit.
3. Appraisal Fee
Your lender will require an independent appraisal to confirm the home’s value. Expect to pay $300 to $600. This fee is separate from the inspection and typically paid at the time of the appraisal.
4. Loan Origination Fees
Lenders charge origination fees to process your mortgage. These are typically 0.5% to 1% of the loan amount. On a $240,000 loan, that’s $1,200 to $2,400. Sometimes you can negotiate to reduce these, but they usually appear in your loan estimate.
5. Credit Report Fee
Even if you’ve pulled your own credit, lenders pull their own report. This fee is usually $20 to $50. It’s small, but it’s still an expense to budget for.
6. Title Search and Title Insurance
Before you buy, a title company will search public records to ensure there are no liens or claims against the property. That title search costs $150 to $400. You’ll also need a lender’s title insurance policy, which protects the lender’s investment. Combined, you might pay $500 to $1,500 depending on the home price and your state.
7. Land Survey
Some lenders require a land survey to confirm property boundaries. A survey costs $300 to $600. If the seller already has a recent survey, you might be able to reuse it, but be prepared to pay for a new one if not.
Closing Day: The Final Numbers
8. Closing and Escrow Fees
This is a catch-all category that includes attorney fees, notary, wire transfer, and escrow officer charges. These can add up to $1,500 to $3,000. The seller sometimes pays a portion, but buyers often cover the bulk. Your closing disclosure will itemize everything, so review it carefully.
9. Property Taxes (Prorated)
You’ll need to reimburse the seller for property taxes they’ve already paid for the remainder of the year. This prorated amount depends on your closing date and the local tax rate. In many areas, this could be $1,000 to $4,000. You’ll also need to fund your tax escrow account, if your lender sets one up, with several months of tax payments.
10. Homeowners Insurance
Your lender will require a policy before closing. The first year’s premium is often paid up front. For a typical single-family home, that’s $800 to $1,500. You can shop around, but don’t skimp on coverage.
11. Private Mortgage Insurance (PMI)
If your down payment is less than 20%, you’ll pay PMI. This typically runs 0.5% to 1.5% of the loan amount per year, divided into monthly payments. On a $240,000 loan, that’s $100 to $300 a month. Some buyers opt to pay PMI up front as a lump sum at closing. If you’re exploring low down payment options, budget for PMI carefully.
Moving In: The First Month
12. Moving Costs
Movers can cost $800 to $2,500 for a local move, depending on distance and stuff. If you’re doing it yourself, you’ll pay for a truck, fuel, boxes, and pizza for your friends. Don’t forget professional cleaning of your old place, if required.
13. Immediate Repairs and Upgrades
Your inspection might reveal a leaky faucet or a worn-out water heater. Plan to spend at least $1,000 to $3,000 on unexpected fixes during the first month. Even new homes need curtains, door locks, and smoke detectors.
14. New Furniture and Appliances
Maybe the fridge doesn’t stay, or your furniture doesn’t fit. The average buyer spends $2,000 to $5,000 on furniture and appliances in the first year. If the washer and dryer are broken, that’s an immediate $800 to $1,500.
15. HOA Fees and Assessments
If your neighborhood has a homeowners association, you’ll pay monthly or annual dues. These range from $100 to $400 a month and sometimes more. You also need to be prepared for special assessments for community repairs. Check the HOA budget before you buy.
16. Utility Setup and Deposits
Electricity, gas, water, trash, and internet all require connection fees. You might also need to pay a security deposit if you’re a new customer. Set aside $200 to $500 for setup, and remember that your first bills will likely be higher than an apartment’s because you’re now heating and cooling more space.
17. Landscaping and Outdoor Gear
Unless you’re moving into a concrete lot, you’ll need a lawnmower, weed wacker, hoses, and maybe a ladder. These can total $500 to $1,500. If you hire a lawn service, budget $100 to $200 a month instead.
The Ongoing Costs You Can’t Ignore
18. Higher Monthly Utility Bills
Your previous apartment’s bills might be $100 a month. In a larger home, expect $200 to $400 depending on the size, insulation, and energy efficiency. You’ll need to adjust your monthly budget accordingly.
19. Maintenance and Repair Fund
Experts recommend saving 1% to 3% of your home’s value each year for maintenance and repairs. A new roof could cost $7,000, a water heater $1,200. If you don’t have a reserve fund, a single emergency could put you in debt. A good rule of thumb is to keep $5,000 to $10,000 in an accessible account. Inside that fund, you should be ready for at least these common items:
- HVAC system tune-ups and filters
- Plumbing issues like leaks or clogs
- Minor electrical fixes
- Gutter cleaning and exterior painting
For a deeper look at the surprises that pop up, check out what no one tells you about buying a home.
20. Furnishing and Retrofitting (It’s Not Just Furniture)
Beyond the obvious couch and bed, you’ll need window treatments, area rugs, shelving, and maybe a smart thermostat. You might also need to change the locks, which costs $150 to $300 if you hire a locksmith. Retrofitting for safety, like adding carbon monoxide detectors or securing the water heater, can add another $200 to $500.
These 20 expenses aren’t meant to scare you away. They’re meant to make you prepared. When you have a complete picture of the costs, you can walk into the process with confidence, knowing exactly what you’re taking on. And if you’re still wondering whether now is the right time to buy, weighing your readiness can give you the answer. After all, a well-budgeted purchase is one you won’t regret.