First-time buyers often focus so much on the down payment that other expenses come as a surprise. Knowing what's ahead lets you plan for it and avoids the financial stress of being caught short at a critical moment.
1. Closing Costs
Closing costs typically run somewhere between 2% and 5% of the loan amount, though the exact figure varies by loan type, location, and the specifics of your transaction. They cover things like the lender's origination fee, a title search and title insurance, an appraisal, attorney fees (in some states), and prepaid items like homeowner's insurance and property tax escrow. Your lender is required to give you a Loan Estimate early in the process — read it carefully.
2. Inspection and Related Fees
A standard home inspection is typically a few hundred dollars and is money well spent. Depending on the property, you may also want specialized inspections for things like radon, pests, or the condition of a well or septic system. These add up, but they protect you from much larger surprises post-closing.
3. Moving Expenses
Moving costs range widely depending on how far you're going and how much you have to move. Local moves using a rental truck are on the lower end; long-distance professional movers can cost considerably more. Don't overlook the small things — boxes, packing supplies, temporary storage if your move date and closing date don't align perfectly.
4. Ongoing Ownership Costs
Property taxes and homeowner's insurance are recurring annual expenses that get factored into your monthly payment if you have an escrow account — but it's worth understanding what they actually are. Utility costs often increase when moving from a rental to a larger owned home. If the property has an HOA, those fees are mandatory and can vary significantly by community.
5. Maintenance and Repairs
Unlike renting, where you call the landlord, owning a home means you're responsible for what breaks. A common guideline suggests budgeting roughly 1% of your home's value annually for maintenance and repairs — though this varies significantly by the age and condition of the property. Building a dedicated reserve fund before you close gives you a financial buffer when the inevitable happens.
Want to understand exactly what to expect on the cost side before you start shopping? Our team at First Look can walk you through a full picture so there are no surprises.
