When you start saving for a home, the down payment usually gets all the attention. But the money you’ll need to buy a home goes beyond that one number. Knowing the full picture helps you set a savings goal you can actually plan around.
The short answer
You’ll usually need more than your down payment. Plan for closing costs, prepaid expenses, a home inspection, moving costs and your first expenses as a homeowner.
Most buyers have four main buckets of upfront costs to plan for:
2Closing costsFees to finalize your loan and purchase
3Prepaids and escrowInsurance, interest and tax deposits paid in advance
4Move-in costsInspection, moving, utilities and early repairs
How much is the down payment on a house?
Your down payment is the part of the purchase price you pay upfront. The amount varies by loan program, your qualifications and your goals. Twenty percent isn’t required for every loan. Some eligible borrowers may qualify for conventional or government-backed options with lower down payment requirements.
A larger down payment can lower the amount you borrow, but using all your savings can leave little room for moving, repairs or emergencies.
How much are closing costs?
Closing costs can include lender charges, appraisal and title services, government recording fees and other transaction expenses.
2% to 5%
of the purchase price is a common range for closing costs, not including your down payment, according to the Consumer Financial Protection Bureau.
Your actual costs depend on the property, loan and location. After you apply, your Loan Estimate shows figures specific to your transaction.
What are prepaid costs and escrow?
Some costs are paid in advance at closing. These can include homeowners insurance, interest from your closing date to the end of the month and initial deposits into your escrow account for future property taxes and insurance.
These aren’t lender fees, but they do add to the cash you’ll need at closing.
What other costs come with buying a home?
You may also pay for a home inspection, movers, utility setup and early repairs or furnishings. These expenses won’t always show up alongside your mortgage costs, but they still affect how much cash you need for a smooth move.
Why shouldn’t I rely on one percentage?
Online estimates are a helpful starting point, but a single percentage can’t account for your loan program, property tax bill, insurance premium or agreement with the seller.
Ask for a personalized estimate, review your Loan Estimate carefully and keep enough savings for life after closing.
Frequently asked questions
Do I need 20% down to buy a home?
No. Down payment requirements vary by loan program and borrower eligibility.
Are closing costs included in the down payment?
No. Your down payment and closing costs are separate, but both add to the total cash you need at closing.
When will I know my actual closing amount?
Your lender will provide required disclosures, including your Loan Estimate, during the mortgage process. The final amount can change as details are finalized, so review updated documents and ask questions.
Turn your savings goal into a plan
A USA Mortgage Mortgage Loan Originator can help you estimate your down payment, closing costs and monthly payment for the options available to you.
DAS Acquisition Company, LLC is not affiliated with or endorsed by any government entity or agency, including USDA, HUD or VA.
