A happy couple holding keys.
Learn what costs factor into buying a home before you make any big decisions.

When it comes to the costs of buying a home, many prospective homeowners focus on closing costs and the mortgage payment. This a good start, however, there are many other associated costs to consider. Learning how to factor in all upfront and ongoing costs, as well as your needs versus your wants, can help you make your final buying decision.

As you begin to take steps toward homeownership, here are the costs to keep in mind.

Costs of Buying a Home

Before you step into your new dream home, you'll pay several upfront costs. There are also many costs that are ongoing. Taking this information into account and gathering estimates can help you plan and budget as you step into the home buying process.

Some of the upfront costs of buying a home may include:

  • Earnest money deposit
  • Down payment
  • Moving costs
  • Closing costs, including appraisal and home inspection costs

Some of the ongoing costs of buying a home may include:

  • Property taxes
  • Mortgage insurance
  • Homeowners insurance
  • Homeowners association (HOA) fees
  • Home maintenance
  • Utilities

Earnest Money Deposit

An earnest money deposit, or earnest payment, is money you pay up front after making an offer on a home. The earnest payment, which is usually 1-2% of the purchase price, is paid after a buyer and seller enter into a purchase agreement. From the seller's perspective, the earnest money deposit shows that your offer is serious. After closing, the deposit is applied to the buyer's down payment or closing costs.

Down Payment

Many factors go into determining the down payment, or the percentage of your home's purchase price that you pay upfront. The average down payment has ranged from 6% to 7% for first-time buyers since 2018 and around 17% for repeat buyers. Keep in mind that a larger down payment will translate to a lower monthly mortgage payment. A down payment below 20% will also generally require you to pay private mortgage insurance (PMI) until you reach the 20% equity level.

Moving Costs

Your moving costs will depend on the size of your home and how far you have to travel for your move. For example, for a one-bedroom apartment, a local move might cost about $500. However, an out-of-state move to a home with four to five bedrooms more than 1,000 miles away could cost as much as $10,000.

Closing Costs

Typical closing costs for a home may include a number of items, including loan origination fees, appraisal fees, home inspection, title search, title insurance, taxes and any discount points you may pay. Be sure to research closing costs based on where you're purchasing your home, as closing costs vary by state. The U.S. average closing cost for buyers in 2021 was $3,860 without transfer taxes and $6,905 with transfer taxes. Some states don't impose a transfer tax on real estate. In those that do, where you live will determine whether you or the seller is responsible for this cost.

Property Taxes

The main factors that influence how much you pay in property taxes on your home will include the size of your home and the local tax rate where you live. The average property taxes in the U.S. are about $2,500 per year but can vary widely by state, ranging from about $500 up to more than $8,000. Your real estate agent or lender can help you learn more about property taxes in your area.

Homeowners Insurance

The average cost of homeowners insurance in the U.S. is $1,272. However, like many other costs of buying a home, the cost of homeowners insurance varies depending on the size and location of your home. Also, homeowners living near water may need to consider flood insurance, which is a separate policy.

HOA Fees

If you're buying a home in a private community, you may be required to pay a homeowners association (HOA) fee, which goes toward covering the community's annual operating budget. The average HOA fee may range from $200 to $300 per month, but this number can vary widely.

Home Maintenance

The cost to maintain a home depends on a number of factors, including the size of your home, how long you live in your home, if you do it yourself or hire a maintenance service, and whether or not you have a yard. As a general rule, you can budget about $1 for every square foot of livable space per year.


One of the ongoing costs of owning a home is utilities, which may include gas, electricity, water and internet. You can ask your real estate agent about the average cost of utilities in your area, as they typically have access to this information.

Consider Needs vs. Wants When Buying a Home

When searching for your dream home, and when considering the upfront and ongoing costs, it's important to distinguish between your needs and wants. Think of which costs are required or otherwise essential and which can be avoided or minimized to help pare down the total cost of buying your home.

Some prospective homebuyers will come up with a list of "must-haves" and a separate list of "nice-to-haves." For example, you may need three bedrooms and two baths, but it would be nice to have a study and an extra half-bath. Having fewer rooms may mean a lower down payment, as well as lower mortgage payments, property taxes and home maintenance costs.

It can be easy to focus on your mortgage or closing costs and overlook some of these additional costs when searching for that ideal property. By gathering information in advance and speaking with your real estate agent, as well as a knowledgeable lender, you can get a more complete picture of the associated costs of buying a home.