How much money do you need to buy a house? For most first-time homebuyers, the answer goes well beyond the down payment alone — a series of smaller expenses quickly add up, some due before you even submit an offer, others waiting for you at closing. Browse more of our buying a house guides for additional tips
The down payment isn’t the only major expense
Although the down payment often takes center stage, it represents only a portion of the total amount you need to save. With conventional loans, it is often possible to put down as little as 3% to 5%, whereas other types of loans come with specific minimum requirements. A smaller down payment usually means Private Mortgage Insurance (PMI) is added to your monthly payments until you have built up sufficient equity; consequently, lower upfront costs can result in a higher total cost in the long run.
How Much Money Do You Need to Buy a House Beyond the Down Payment?
Costs associated with the purchase (often called “closing costs”) typically range from 2% to 5% of the purchase price and cover various items: loan processing fees, property appraisal, title verification, title insurance, attorney fees (in some states), and property registration fees. Therefore, for a house sold for $350,000, additional costs of between $7,000 and $17,500 may be added to the down payment when the sale is finalized. For official guidance on the homebuying process, see HUD’s homebuyer resources.
Home inspection and appraisal costs
Before closing the sale, most buyers pay for two separate evaluations:
- Home inspection: verification of the property’s structural condition; cost: generally a few hundred dollars.
- Appraisal: confirmation of the home’s value for the lender; generally required when financing is involved.
Skipping the inspection to save money is one of the decisions buyers most regret after moving in.
Often overlooked moving and setup costs
Other expenses also arise after receiving the keys:
- Moving costs (truck rental, moving company, or both)
- Setting up utilities and services (water, electricity, etc.) and paying security deposits
- Immediate repairs or security measures
- New furniture or appliances suited to the new space
Property taxes and homeowners insurance
These items will be part of your monthly housing costs; they are often included directly in your monthly mortgage payment via an escrow account. Since property tax rates vary significantly from one location to another, it is wise to research local rates before settling on a specific neighborhood.
A practical budgeting formula
A useful rule of thumb: in addition to your down payment, set aside an amount equal to 3% to 6% of the purchase price to cover transaction costs and immediate moving-related expenses. By factoring this safety margin into your savings plan from the start, you can avoid the financial stress that often catches first-time homebuyers off guard.
Frequently Asked Questions
Q: How much money do you need to buy a house as a first-time homebuyer?
A: When factoring in the down payment, purchase-related expenses, and initial moving costs, many buyers spend—in addition to the down payment itself—an amount equivalent to between 5% and 10% of the purchase price.
Q: Are purchase-related expenses negotiable?
A: Some associated costs can be negotiated between the buyer and the seller; therefore, it is advisable to consult your real estate agent to see if it is possible to secure price reductions or have the seller cover certain expenses in your local market.
Q: Is a home inspection (technical assessment) mandatory for every real estate purchase?
A: In most cases, the law does not require it, but skipping it is considered risky, especially with older homes.
