Hidden Costs of Home Buying

Budgeting for buying a home can be difficult enough when you’re just weighing mortgage options and a purchase price. But there are many other factors that go into the cost of home ownership. Some of them are one-time expenses that you’ll pay during the home buying process, while others will be recurring costs for as long as you own the home.

Down Payment

The typical down payment ranges from 3% to 25% of the purchase price depending on the type of mortgage you are approved for, and whether you are buying a condo. Anything more than that is your choice, but the minimum is required. Except for veterans approved for a VA Loan, which doesn’t require a down payment.

Closing costs

There are several smaller fees that add up to a rather large sum when you’re going through the closing process-loan fees, attorney fees, underwriting fees, and more. They typically add up to 2-5% of the purchase price. For a $300,000 home-roughly the national median-it’s within the neighborhood of $10,000, so be sure to budget for it.


Your lender will require an appraisal, and the appraisal fee (a few hundred dollars) comes out of your pocket.


The few hundred dollars you’ll pay for a home inspection is money well spent, but it’s something you must keep in mind during the purchase process. You’ll have the peace of mind of knowing the house is free from any major issues, and you’re making a smart, solid investment.


Although homeowner’s insurance isn’t legally required, it’ll almost certainly be required by your lender. Further insurance, such as flood insurance, may also be required (depending on your location).

Home Owners Association

If you’re living in a property or community with shared spaces, you’ll almost certainly have an HOA fee. This pays for things like trash removal, maintenance of common areas, and for recreational facilities like gyms and swimming pools. Not to mention any rises in that monthly HOA fee for any needed renovations, upgrades, or construction to the shared spaces, referred to as a special assessment.


It is a fact that it is still cheaper to Buy than to Rent, when it comes to your monthly payment. But there are costs that come with the initial purchase of your home! Plan for it accordingly. Get as many estimates as you can, keep flourishing your savings account, and choose the professionals around you wisely.

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