Big upfront costs
When buying a home, most people focus on three main money pieces: the down payment, the closing costs, and early items like inspections and the appraisal. These costs sit on top of the basic monthly payment for the loan.
- The down payment is the part of the price you pay from savings at closing.
- Closing costs are extra fees tied to the loan, the title work, and setting up taxes and insurance.
Down payment
The down payment is a key cost that helps decide your loan size. Different loan types can allow different down payment percentages.
- A larger down payment lowers how much you borrow and can lower the monthly payment.
- A smaller down payment keeps more cash in your account but may raise the loan amount and monthly cost.
Closing costs
Closing costs are a bundle of fees connected to the purchase and the loan. These are usually paid at the end of the process, on closing day.
- They often include lender fees, title and escrow fees, recording fees, and prepaid items like property taxes and homeowners insurance.
- The total can add up to a noticeable amount, so many buyers plan for both the down payment and closing costs together.
Inspections and appraisal
During the due diligence period, buyers often pay for inspections and the appraisal. These are usually paid as they are ordered, not at the very end.
- Common inspections include a general home inspection and, in some cases, extra checks such as roof or pest inspections.
- The lender usually orders an appraisal to estimate value for the loan, and the buyer often pays this fee.
Moving and setup costs
There are also “life” costs that come with changing homes. These are not part of the loan, but they still matter for planning.
- Examples include moving services, utility deposits, simple repairs, and new locks or basic home items.
- Some buyers also set aside money for early upgrades, even small ones like paint or light fixtures.
Simple summary
The main costs when buying a home usually include the down payment, closing costs, and due diligence items like inspections and the appraisal, plus practical moving and setup expenses. Together, these give a fuller picture of what it can take in cash, beyond just the monthly loan payment.