
“How much does it cost to buy a home?” you may ask yourself when getting excited at a home listing you just love.
Sure, the list price may be appealing, but there are many other factors to consider when tallying up what the one-time and ongoing expenses may be for you as a homeowner.
Buying a house is a significant financial decision that requires careful consideration of various costs, both one-time and ongoing.
Whether you’re a first-time homebuyer or a seasoned investor, understanding these expenses is crucial for making informed decisions and managing your budget effectively.
Let’s take a look at the truth behind the question, “How much does it cost to buy a home?”

How Much Does It Cost To Buy a Home? One-Time Expenses:
1. Down Payment:
The down payment is typically the largest upfront cost when purchasing a home. It’s a percentage of the home’s purchase price paid in cash.
The amount varies depending on factors like the type of mortgage and your creditworthiness.
Your creditworthiness plays a crucial role in determining your ability to secure a mortgage and the terms you’ll be offered. Here’s how this affect the mortgage process:

Mortgage:
1. Loan Amount:
The mortgage amount refers to the total sum borrowed from a lender to purchase a home. It’s typically determined based on factors like the purchase price of the home, your down payment amount, and your financial situation.
2. Interest Rate:
The interest rate is the cost of borrowing money from the lender, expressed as a percentage of the loan amount. It directly impacts your monthly mortgage payments and the total amount of interest you’ll pay over the life of the loan. Generally, borrowers with stronger credit profiles and larger down payments are offered lower interest rates.
3. Loan Term:
The loan term refers to the length of time over which you’ll repay the mortgage. Common terms include 15, 20, or 30 years. Shorter loan terms typically come with lower interest rates but higher monthly payments, while longer terms result in lower monthly payments but higher overall interest costs.
4. Mortgage Type:
There are various types of mortgages available, including fixed-rate mortgages, adjustable-rate mortgages (ARMs), FHA loans, VA loans, and more. Each type has its own eligibility requirements, down payment requirements, and terms. Your financial situation and preferences will influence which type of mortgage is most suitable for you.
Creditworthiness:
1. Credit Score:
Your credit score is a numerical representation of your creditworthiness based on your credit history. Lenders use credit scores, such as FICO scores, to assess the risk of lending to you. Higher credit scores indicate a lower risk of default, making you a more attractive borrower. A good credit score can help you qualify for lower interest rates and better loan terms.
2. Credit History:
In addition to your credit score, lenders also consider your credit history, which includes factors such as your payment history, the length of your credit accounts, your credit utilization ratio, and any derogatory marks (e.g., bankruptcies, foreclosures, collections). A positive credit history demonstrates responsible financial behavior and can strengthen your mortgage application.
3. Debt-to-Income Ratio (DTI):
Your debt-to-income ratio is a measure of your monthly debt payments relative to your gross monthly income. Lenders use DTI to evaluate your ability to manage additional debt obligations, such as a mortgage payment. A lower DTI ratio indicates a lower risk of default and may improve your chances of qualifying for a mortgage with favorable terms.
4. Employment and Income:
Lenders typically require proof of stable employment and sufficient income to repay the mortgage. Your employment history, salary, bonuses, commissions, and other sources of income are important factors in assessing your ability to afford the monthly mortgage payments.
Your creditworthiness significantly impacts your ability to secure a mortgage and the terms you’ll receive. Maintaining a strong credit profile, managing your debt responsibly, and demonstrating stable income are essential for obtaining favorable mortgage terms and achieving your homeownership goals.
Make sure you know your rights as a homebuyer.
2. Closing Costs:
Closing costs encompass various fees associated with finalizing the home purchase. These may include loan origination fees, appraisal fees, title insurance, attorney fees, and more. On average, closing costs range from 2% to 5% of the home’s purchase price.
3. Home Inspection:
Before closing the deal, it’s essential to conduct a home inspection to assess the property’s condition thoroughly. While it’s an optional expense, it can save you from potential future repair costs by identifying issues early on.
According to Angi, the normal range of a home inspection cost is $281-403.
It’s important to consider the value and thoroughness of the inspection when comparing costs. While it might be tempting to opt for the cheapest option, investing in a reputable and experienced home inspector can provide you with more comprehensive insights into the property’s condition, potentially saving you from costly surprises down the line.
Before hiring a home inspector, it’s advisable to research local inspectors, read reviews, and inquire about their qualifications, certifications, and what’s included in their inspection services. Ultimately, the goal of a home inspection is to ensure that you have a clear understanding of the property’s condition before finalizing the purchase, empowering you to make informed decisions about your investment in real estate.
4. Appraisal Fees:
Lenders typically require a professional appraisal to determine the fair market value of the property. This cost is usually borne by the buyer and is necessary for securing a mortgage.
5. Moving Costs:
Don’t forget to budget for moving expenses, including hiring movers, renting a truck, or purchasing packing materials.
The cost can vary depending on the distance of the move and the amount of belongings you have.

How Much Does It Cost To Buy a Home? Ongoing Expenses:
1. Mortgage Payments:
Your monthly mortgage payments include principal, interest, property taxes, and homeowners insurance. It’s essential to factor in these ongoing expenses into your budget to ensure you can comfortably afford homeownership.
2. Property Taxes:
Property taxes are levied by local governments based on the assessed value of your home. The amount can vary significantly depending on your location and the value of your property.
3. Homeowners Insurance:
Homeowners insurance protects your investment by covering damages to your home and personal belongings. The cost varies based on factors like the size and location of your home, as well as the coverage options you choose.
4. Maintenance and Repairs:
Owning a home comes with ongoing maintenance and repair costs. From routine upkeep like lawn care to unexpected repairs like a leaky roof, it’s essential to set aside funds for these expenses to keep your home in good condition.
5. HOA Fees:
If you buy a property in a community governed by a homeowners association (HOA), you’ll likely have to pay monthly or annual fees. These fees cover communal amenities and services but can vary widely depending on the HOA’s rules and the amenities provided.
According to the United States Census Bureau’s 2021 American Housing Survey, the national average is $191/month. However, HOA fees vary greatly by state.
The average in New York City is $771 per month, while Los Angeles is $388.
Homeowners within the community typically have a say in how HOA fees are allocated and spent.
HOA boards, comprised of elected homeowners or appointed representatives, are responsible for managing the association’s finances, setting budgets, and making decisions about maintenance, improvements, and community policies.
While HOA fees contribute to the upkeep and enhancement of the community, they also come with certain rules, regulations, and restrictions that homeowners must abide by.
These can include architectural guidelines, landscaping requirements, noise restrictions, and pet regulations.
Homebuyers should review the HOA’s governing documents and rules before purchasing a property to ensure they are comfortable with the association’s requirements.

What Now?
Understanding the full spectrum of costs associated with buying a house is crucial for making informed financial decisions.
By budgeting for both one-time and ongoing expenses, you can ensure a smoother transition into homeownership and enjoy your new home without financial stress.
Still have questions about what it truly means to own a home?
There are several free resources available to help individuals understand the responsibilities of homeownership and navigate the various aspects of owning a home.
#1 Government Websites:
- U.S. Department of Housing and Urban Development (HUD): HUD offers a wealth of information and resources for homebuyers, including guides on the homebuying process, homeowner rights and responsibilities, and tips for maintaining a home.
- Consumer Financial Protection Bureau (CFPB): The CFPB provides educational materials, tools, and resources to help consumers make informed decisions about homeownership, including guides on mortgages, homebuying, and managing homeownership costs.
#2 Nonprofit Organizations:
- NeighborWorks America: NeighborWorks America provides homeownership education and counseling services through a network of nonprofit organizations across the country. They offer resources on budgeting, home maintenance, foreclosure prevention, and more.
- National Association of REALTORS® (NAR): NAR offers educational resources for homebuyers, including articles, videos, and guides covering various aspects of homeownership, from financing and insurance to home maintenance and remodeling.
#3 Local Government and Community Resources:
- Check your local government’s website for information on homeownership programs, property tax resources, and community services available in your area.
- Community organizations, libraries, and local housing authorities may also offer workshops, seminars, and educational materials on homeownership topics.
By utilizing these free resources, individuals can gain valuable insights into the responsibilities of homeownership, learn how to navigate the homebuying process, and acquire the knowledge and skills needed to effectively manage and maintain their homes.
Remember, buying a house is not just about the initial investment but also about managing the ongoing expenses responsibly to maintain your home’s value and your financial stability.