How Much Money Do You Really Need to Buy a House?
You don't necessarily need tens of thousands of dollars sitting in a savings account to buy a home.
But you do need to understand where your money goes.
The down payment is only one piece of the puzzle.
The Five Major Costs
When you're preparing to buy, consider:
Down payment
Closing costs
Earnest money
Inspection and other due diligence costs
Cash reserves
Let's break them down.
Your Down Payment
Your down payment depends on your loan program and financial situation.
Some buyers put down 3%, others put down 5%, 10%, or 20% or more.
There isn't one universally correct amount.
Closing Costs
Closing costs can include lender fees, title-related expenses, prepaid taxes and insurance, recording fees, and other expenses associated with purchasing the home.
Your lender should provide estimates so you can plan ahead.
Earnest Money
Earnest money is a deposit that demonstrates you're serious about purchasing the property.
It typically becomes part of the funds applied toward your purchase at closing, assuming the transaction proceeds as planned.
Inspections
A home inspection isn't technically part of your down payment or closing costs, but it's an important expense to budget for.
Depending on the property, you may also choose additional inspections such as radon, sewer, well, septic, or other specialized inspections.
Don't Forget Your Emergency Fund
This might be the most important part.
We don't recommend using every dollar you have just to get the keys.
Homes need things.
Furnaces break. Appliances fail. Unexpected repairs happen.
Having money left over after closing can give you breathing room.
The Bottom Line
Before you start shopping, ask:
"What can I comfortably afford to spend upfront while still maintaining a healthy financial cushion?"
That's a much better question than simply asking, "What's the minimum I can put down?"
Your lender can help you understand the financing side, and your Realtor can help you understand the purchase process.
We want you to feel confident about the entire picture—not just the purchase price.
Ali Rohde, exp Realty
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