When you’re preparing to buy a home, it’s easy to focus solely on the listing price. But the purchase price is only part of the equation. Homeownership comes with a number of additional expenses—some expected, others less obvious—that can quickly add up if you’re not prepared.
To avoid surprises, it’s important to understand the full financial picture before you make an offer. Here’s a breakdown of common (and often overlooked) costs you should budget for when buying a home.
Closing Costs
Closing costs typically range from 2% to 5% of the home’s purchase price and are due when the transaction is finalized. These include:
Loan origination fees (charged by your lender to process your mortgage)
Appraisal and home inspection fees
Title insurance and title search fees
Attorney fees (if required in your state)
Recording and transfer taxes
Prepaid taxes and insurance premiums
It’s important to request a Loan Estimate from your lender early in the process so you can anticipate these costs.
Property Taxes
Property taxes vary by location and can significantly impact your monthly mortgage payment. Some lenders require you to pay property taxes upfront at closing or include them in your escrow account. Make sure you understand the tax rate in the area you’re buying, as this cost can increase over time.
Homeowners Insurance
Most lenders require you to carry homeowners insurance as part of your mortgage agreement. The annual premium depends on your home’s location, value, size, and risk factors like natural disasters or crime rates. This cost may also need to be paid in advance at closing.
Private Mortgage Insurance (PMI)
If your down payment is less than 20%, your lender may require private mortgage insurance. PMI protects the lender—not you—in case of default. This cost is typically added to your monthly mortgage payment, and it can be removed once you reach a certain equity threshold.
HOA Fees
If you’re buying a property in a community with a homeowners association (HOA), you may be responsible for monthly or annual dues. These fees cover amenities, maintenance, and other community costs, and can vary widely depending on the neighborhood.
Maintenance and Repairs
Once you own a home, you’re responsible for all upkeep and repairs—both expected and unexpected. Budget for:
Ongoing maintenance (lawn care, cleaning, HVAC servicing)
Emergency repairs (plumbing issues, roof leaks, appliances breaking down)
Long-term updates (replacing roofing, remodeling, or exterior work)
Experts often recommend setting aside 1% of your home’s value each year for maintenance expenses.
Utilities and Services
Utilities like water, gas, electric, trash pickup, and internet are often more expensive for homeowners than renters. You’ll also want to factor in additional services such as:
Pest control
Security systems
Sewer or well maintenance (in rural areas)
These recurring costs are essential to your monthly budget planning.
Moving Expenses
Don’t forget to include the cost of the move itself. Whether you’re hiring professionals or doing it yourself, moving trucks, supplies, and time off work can all create unexpected costs during the transition period.
Final Thoughts
Buying a home is a major milestone—but it’s also a major financial commitment that goes beyond the sale price. Being aware of the hidden costs will help you budget wisely and prevent unwelcome surprises during and after the home-buying process.
At First Capitol Real Estate, we help our clients navigate every aspect of the home-buying journey—including the financial realities that aren’t always advertised. If you’re preparing to purchase your first (or next) home, our team is here to guide you through every step—transparently and confidently.
Ready to start your home search with a clear financial game plan? Reach out to us today.
