The True Cost of Buying a Home (It's More Than the Price)

The listing price is just the beginning. When you're planning to buy, the number that actually matters is how much cash you need to have ready — and that number is always higher than the price tag alone. Here's the full picture.

The Down Payment

This is the one most people plan for. The question is how much makes sense for your situation.

• 20% down ($80,000 on a $400K home): Avoids private mortgage insurance (PMI), lower monthly payment, strongest offer in competitive markets.
• 10% down ($40,000): A common middle ground — lower upfront cost, PMI adds roughly $100–$200/month to your payment until you reach 20% equity.
• 3.5% down ($14,000): The FHA loan minimum, accessible for many first-time buyers. PMI is required and tends to be slightly higher with FHA loans.

Closing Costs — The One That Catches People Off Guard

Closing costs are the fees due at the final step of purchase, and they surprise almost everyone the first time. They typically run 2–5% of the loan amount — on a $400K home with 10% down, that's $7,200–$18,000 due at closing, on top of your down payment.

What's included: lender origination fees, title insurance, appraisal, home inspection, attorney fees (in some states), and prepaid property taxes and insurance. Your lender is required to give you a Loan Estimate within three days of application — that document will spell out exactly what you're looking at.

Moving Costs

Local move with movers: $800–$2,500. Long-distance: $3,000–$10,000+. DIY with a rental truck: $200–$500, plus the pizza and goodwill you owe everyone who helped.

Immediate Repairs and Updates

Even a move-in ready home tends to need something in the first few weeks — new locks, a fresh coat of paint somewhere, a repair flagged in the inspection. It's reasonable to budget $1,000–$5,000 here depending on the home's age and condition.

Your Post-Closing Cash Buffer

Most lenders want to see 2–6 months of mortgage payments in savings after closing. This isn't just a lender requirement — it's genuinely good practice. If your mortgage is $2,400/month, a 3-month buffer is another $7,200 to plan for.

The Ongoing Monthly Picture

Beyond the mortgage payment itself, plan for:

• Property taxes — varies widely, but commonly $250–$600/month on a $400K home depending on location
• Homeowner's insurance — roughly $100–$200/month
• PMI if your down payment was under 20% — typically $100–$200/month
• HOA fees if applicable — anywhere from $50 to $500+/month
• Utilities, which tend to run higher than in a rental