The short answer
- First-time buyers put down a median of 10% in NAR's 2025 survey. On a $400,000 home, that's $40,000.
- Closing costs add 2% to 5% of the loan: $7,200 to $18,000 on a $360,000 mortgage.
- Before closing you also pay for an inspection (about $300 to $500) and usually the appraisal (about $375 to $450), and you put up earnest money that counts toward the price.
- After closing come moving, setup and repairs. A common rule is to save 1% to 2% of the home's value a year for upkeep.
- Keep a cash cushion after closing. Spending every dollar on the down payment is the most common first-buyer mistake.
Educational estimate, not financial advice. The numbers below are examples to help you plan. They are not a loan offer, and nothing here promises you'll qualify. Your lender's Loan Estimate shows your real costs. Talk with a licensed lender, a HUD-approved housing counselor or a financial adviser before you commit.
The costs in the order you pay them
Buying a home spreads costs over about two months, and some are due long before you get the keys. Here is the typical order for a financed purchase:
- Under contract: earnest money, due within a few days of signing.
- During the inspection period: the home inspection and any specialty inspections.
- During underwriting: the appraisal, often paid upfront to the lender.
- At closing: the down payment, closing costs, prepaid interest, the first year of homeowners insurance and the initial escrow deposit.
- After closing: moving, utilities, locks, tools, furniture and repairs. Your first mortgage payment is usually due on the first day of the second month after closing.
Before closing: earnest money, inspection and appraisal
Earnest money
Earnest money shows the seller you're serious. It's set by local custom and by negotiation, often around 1% to 3% of the price in many markets, and is held by a title company, escrow agent or attorney. It isn't an extra cost if the deal closes, because it's credited toward your down payment or closing costs. It is money at risk, though. Your contract's contingencies (inspection, appraisal, financing) say when you can walk away and get it back. Miss a contingency deadline, or back out for a reason the contract doesn't cover, and you can lose it.
Home inspection
A general inspection averages about $400 nationally, with most falling between $300 and $500, according to Fixr's cost data. Larger and older homes cost more. Lenders rarely require it, which is exactly why some buyers skip it. Don't. The inspection is your best chance to learn about a failing roof or a cracked heat exchanger while you can still negotiate or walk away. HUD's "For Your Protection: Get a Home Inspection" notice, which FHA buyers must receive, makes the same point: the appraisal is not an inspection.
Specialty inspections are worth it where the risk is real: radon ($125 to $400), a sewer scope on older homes or homes with big trees ($200 to $1,000), a termite inspection ($150 to $350) in termite country, and a mold check if you see or smell moisture ($450 to $800).
Appraisal
Your lender orders an appraisal to confirm the home is worth what you're borrowing against. Fixr puts the typical cost at $375 to $450, from about $300 for a small, simple home to $1,200 for a large or unusual property. If the appraisal comes in low, you can renegotiate the price, pay the gap in cash, or use an appraisal contingency to walk away.
| Cost | Typical range | Refundable? |
|---|---|---|
| Earnest money | Often 1% to 3% of price | Credited at closing; returned if a contingency lets you exit |
| General home inspection | $300 to $500 | No |
| Radon test | $125 to $400 | No |
| Sewer scope | $200 to $1,000 | No |
| Termite (pest) inspection | $150 to $350 | No |
| Appraisal | $375 to $450 | No, even if the deal falls apart |
At closing: the down payment and closing costs
Down payment
NAR's 2025 Profile of Home Buyers and Sellers found the median first-time buyer put down 10%, tied for the highest since 1989, and was 40 years old. Most used savings (59%). About a quarter tapped 401(k)s or other investments, and 22% got a gift or loan from family or friends. You don't have to put down 20%. Freddie Mac notes some conventional loans allow 3% down. Below 20% you'll pay private mortgage insurance (PMI). Many state housing finance agencies run down payment assistance programs for first-time buyers, so check yours before you assume you need more cash.
Closing costs
Freddie Mac says to expect closing costs of 2% to 5% of the loan amount. The CFPB lists the usual pieces: lender fees, the appraisal, title insurance, government recording fees and transfer taxes, plus prepaid items such as property taxes, homeowners insurance and interest until your first payment. Transfer taxes vary the most from state to state. Some states charge little or nothing; others charge a percentage of the price.
You get a Loan Estimate within three business days of applying. Get one from at least three lenders and compare them line by line, because lender fees and rates differ for the same borrower. You must receive your Closing Disclosure three business days before closing. Check that the cash to close matches your latest Loan Estimate, and ask about any change.
Prepaids and the escrow deposit
Prepaids surprise many first-time buyers because they aren't fees. They're your own bills, paid early:
- Prepaid interest covers the days from closing to the end of that month. On a $360,000 loan at 7.24%, interest runs about $71 a day, so closing on the 15th of a 30-day month adds roughly $1,140.
- Homeowners insurance: lenders usually want the first year's premium paid at or before closing. The average HO-3 premium was $1,569 in 2022, the latest year in NAIC's study, and rates in many states have risen since. Get real quotes early, especially in storm or wildfire areas. Standard policies don't cover flood.
- Initial escrow deposit: if the lender pays your taxes and insurance, it collects enough at closing to cover the first bills. Federal rules cap the extra cushion at one-sixth of a year's escrow payments, about two months.
Worked example: a $400,000 first home
Assumptions: $400,000 price, 10% down, a $360,000 30-year fixed loan at 7.24% (the Freddie Mac average for October 29, 2026), property taxes of 1% of value ($4,000 a year), insurance of $2,000 a year and closing on the 15th. Your county's tax rate and your insurance quote will change these numbers.
| Item | Low | High |
|---|---|---|
| Inspection plus one add-on | $425 | $900 |
| Appraisal | $375 | $450 |
| Down payment (10%) | $40,000 | $40,000 |
| Closing costs, 2% to 5% of the loan | $7,200 | $18,000 |
| Prepaid interest (16 days) | $1,143 | $1,143 |
| First-year insurance premium | $2,000 | $2,000 |
| Initial escrow (3 months of tax, 2 of insurance) | $1,333 | $1,333 |
| Cash needed through closing | $52,476 | $63,826 |
Earnest money is already inside the down payment line, so it isn't added twice. Lenders sometimes count prepaids inside the 2% to 5% and sometimes list them apart, so the high column may double-count a little. That's a safe way to budget.
The monthly payment then looks like this. Principal and interest on $360,000 at 7.24% over 30 years is $2,453, from the standard formula M = P × r ÷ (1 − (1 + r)−n), where r is the monthly rate (0.0724 ÷ 12) and n is 360 payments. Add $333 for taxes, $167 for insurance and PMI, which depends on your credit score and down payment and appears on your Loan Estimate. If PMI were $150, the total would be about $3,103 a month, before any HOA dues.
With a conventional loan, you can ask the servicer to cancel PMI once the balance reaches 80% of the original value, and it must end automatically when the balance is scheduled to hit 78%. FHA loans use their own mortgage insurance with different rules.
After closing: moving, setup and the first year
These costs don't show up on any lender form, so they're the ones that blow budgets. The ranges below are planning estimates, not survey averages. Fill in your own.
| Cost | Planning range | Notes |
|---|---|---|
| Local move, 2-bedroom | $1,000 to $2,000 | Hired crew; a DIY truck costs less |
| Rekeying or new locks | $100 to $300 | Do it the first week; you don't know who has keys |
| Utility setup and deposits | $0 to $500 | Depends on your credit and the utility |
| Tools, ladder, mower, hoses | $300 to $1,500 | Renters often own none of these |
| Window coverings, furniture, appliances not included | $2,000 to $10,000 | Spread it out; buy what you need first |
| Fixes from the inspection report | Varies | Price them before closing |
| Maintenance reserve | 1% to 2% of value a year | $4,000 to $8,000 on a $400,000 home |
The moving range comes from our moving cost calculator, which also prices long-distance moves, containers and DIY trucks. The packing boxes calculator counts supplies, and once you know the new home's appliances, the electric bill calculator shows what each one adds to your monthly bill. Painting is the classic first project, and the paint calculator tells you how many gallons to buy.
Three costs catch new owners off guard in the first year:
- Escrow shortages. If taxes or insurance go up, the servicer raises your payment after its yearly escrow review, and may ask you to cover a shortage.
- Reassessment. Some places reassess a home when it sells. California, for example, sends a supplemental tax bill. The seller's old tax bill is not your future tax bill.
- The aging-system list. Ask the inspector about the age of the roof, water heater, furnace and AC. Anything near the end of its life belongs in your first-year plan.
Ways to lower the cash you need
- Compare three Loan Estimates on the same day, for the same loan type, and ask each lender to match the best one.
- Shop the services you're allowed to shop. The Loan Estimate shows which ones, often title services and the survey.
- Seller concessions and lender credits can cover part of closing. The CFPB points out the trade-off: a seller credit usually comes with a higher price, and a lender credit usually means a higher rate or loan amount.
- Down payment assistance through your state housing finance agency or city. HUD lists programs by state.
- Close late in the month to shrink prepaid interest. It doesn't change the total interest you pay; it just moves cash from closing day to your first payment.
Common mistakes, and when to get help
- Emptying savings at closing. Keep an emergency fund. The first surprise repair usually shows up within months.
- Budgeting from the listing's tax bill. Ask your county or a local lender what your bill will be at your price.
- Waiving the inspection to win a bidding war without a pre-offer walkthrough by a pro.
- New debt before closing. A car loan or new credit card can change your approval. Wait until you have the keys.
- Wire fraud. Scammers send fake wiring instructions that look like your title company's. Before you wire money, call the closing agent at a number you found yourself, not one in the email.
A HUD-approved housing counselor can review your budget and loan options, often for free or at low cost. For contract questions, especially contingencies and deadlines, a real estate attorney is worth the fee. In some states an attorney is part of every closing.
Common questions
How much money do I need to buy my first house?
Plan for the down payment plus closing costs of about 2 to 5 percent of the loan, plus a few hundred dollars each for the inspection and appraisal, moving costs and a cash reserve. On a $400,000 home with 10 percent down, that is roughly $52,000 to $64,000 before moving and the first-year budget.
How much are closing costs for a first-time buyer?
Freddie Mac says to expect closing costs of 2 to 5 percent of the loan amount. On a $360,000 loan that is $7,200 to $18,000. Your Loan Estimate lists the exact fees, and your Closing Disclosure, which you must receive three business days before closing, shows the final numbers.
Do I get my earnest money back?
If the sale closes, the earnest money is credited toward your down payment or closing costs. If you back out for a reason your contract allows, such as a failed inspection or financing contingency within its deadline, you usually get it back. If you walk away for a reason the contract does not cover, you can lose it.
Who pays for the home inspection and appraisal?
The buyer usually pays for both. A general home inspection typically costs about $300 to $500 and is paid when it is done. The appraisal, about $375 to $450 for a typical home, is ordered by the lender and paid upfront or at closing.
What is the escrow deposit at closing?
If your lender pays property taxes and insurance for you, it collects an initial deposit at closing so the account has enough when the first bills come due. Federal rules let it hold a cushion of no more than one-sixth of the year's escrow payments, about two months.
How much should I budget for repairs in the first year?
A common rule of thumb is to set aside 1 to 2 percent of the home's value each year for maintenance and repairs, more for an older home. Start with the items your inspection report flagged, and price anything near the end of its life, such as the roof, water heater or HVAC system.
Sources
Rates and prices checked October 29, 2026. The earnest money range, after-closing ranges and the 1% to 2% maintenance rule are planning estimates, not survey data.
- National Association of REALTORS, 2025 Profile of Home Buyers and Sellers (press release, Nov. 4, 2025): 10% median first-time down payment, median age 40, sources of down payment.
- Freddie Mac, Primary Mortgage Market Survey, 30-year fixed average of 7.24% for the week of Oct. 29, 2026.
- Freddie Mac My Home, Closing your loan: closing costs of 2% to 5% of the loan amount (accessed Oct. 2026).
- Freddie Mac My Home, Down payments and PMI: down payments as low as 3% and PMI below 20% (accessed Oct. 2026).
- CFPB, What fees or charges are paid when closing on a mortgage (reviewed Sept. 2024): what closing costs include, seller and lender credits.
- CFPB, Closing Disclosure explainer: delivery three business days before closing and checking cash to close.
- CFPB, When can I remove PMI? (reviewed Aug. 28, 2026): 80% request, 78% automatic termination.
- 12 CFR 1024.17 (RESPA, Regulation X), escrow accounts: cushion limited to one-sixth of annual escrow payments.
- HUD, "For Your Protection: Get a Home Inspection," form HUD-92564-CN, given to FHA borrowers.
- HUD, Buying a home: state homebuying programs and HUD-approved housing counselors.
- Fixr, Home inspection cost and Home appraisal cost (updated Jan. 31, 2025): inspection, add-on and appraisal price ranges.
- Insurance Information Institute, Homeowners insurance facts, citing NAIC: $1,569 average HO-3 premium in 2022.
- Tax Foundation, Property taxes by state and county (Mar. 2026): look up your county's effective rate in place of our 1% assumption.