Buying a home is a major investment—and while you may have saved for your down payment, there are several other costs that can catch even the most prepared buyers off guard. The key to avoiding financial strain? Knowing what to expect and budgeting wisely from the start. Here’s a breakdown of the most common surprise homebuying expenses and how to plan for them.
1. Closing Costs
Many buyers focus on the down payment and overlook closing costs, which typically range from 2% to 5% of the home’s purchase price. These fees include:
- Title insurance
- Appraisals
- Loan origination fees
- Legal and recording fees
- Prepaid taxes and insurance
Budget Tip: Ask your lender for a Loan Estimate early to avoid last-minute sticker shock.
2. Home Inspections & Appraisals
While not always required, inspections are strongly recommended to uncover issues like roof damage, mold, or foundation problems. A general inspection costs around $300–$500, and more specialized ones may add to the total. An appraisal—required by lenders—can cost an additional $400–$600.
3. Escrow Account Setups
Lenders often require you to prepay several months of property taxes and homeowner’s insurance into an escrow account at closing. This can easily add thousands to your upfront costs.
4. Moving Expenses
From hiring movers to renting trucks and storage units, moving day comes with its own set of costs. Even DIY moves can add up quickly when you factor in supplies, gas, and time off work.
5. Utility Setup Fees
Turning on electricity, gas, water, and internet often includes service fees or deposits. Be sure to ask providers what’s due up front.
6. Furniture & Home Essentials
New home? New needs. Buyers often find themselves purchasing blinds, light fixtures, tools, and even major appliances like refrigerators or washers and dryers—especially if the previous owner took theirs.
7. Repairs & Maintenance
No matter how turnkey your home may seem, small repairs are inevitable. It’s wise to budget at least 1% of your home’s value annually for ongoing maintenance.
8. HOA Fees
If the home is in a community with a homeowners association, monthly or annual dues will be part of your cost of living. These vary widely by neighborhood and can include special assessments.
How to Budget Smarter for Homeownership
- Get pre-approved and request a Loan Estimate to understand true costs
- Factor in all upfront and recurring expenses—not just the down payment
- Create a homeownership emergency fund to handle unexpected repairs or bills
- Work with a trusted real estate agent who will help you navigate every step
The Bottom Line
Understanding the full financial picture of homeownership helps you make better decisions and avoid buyer’s remorse. By budgeting smarter and planning ahead, you’ll feel confident—and financially ready—on closing day and beyond.