Buying a house is one of the biggest financial decisions you’ll ever make, and it’s not just about the sale price. From the down payment to closing costs, there are several other expenses to consider. So, how much money do you really need to buy a house? Whether you’re buying a house in Seattle or a home in Denver – this Redfin guide will break down every major cost to help you budget effectively and avoid surprises.
How much money do I need to buy a house?
You don’t need to save 25% to 30% of a home’s price to become a homeowner. In fact, many buyers, especially first-timers, put down far less.
As a general rule, saving 10% to 15% of the purchase price is a smart goal. That should cover your down payment and closing costs, while giving you a cushion for moving and other initial expenses.
We’ll use the median U.S. home price—about $440,000 as of June 2025—as a benchmark for estimating how much money you’ll need to buy a house.
Estimated savings needed for a home at different price points
| Home Price | 10% Down | Closing Costs (3%) | Estimated Savings Needed |
| $300,000 | $30,000 | $9,000 | ~$45,000 |
| $440,000 (national avg.) | $44,000 | $13,200 | ~$66,000 |
| $600,000 | $60,000 | $18,000 | ~$90,000 |
Key costs of buying a home
Some costs are due before or at closing, while others (like mortgage payments or HOA fees) kick in after you’ve moved in. Here’s a breakdown of the most important costs you’ll need to cover:
- Earnest money deposit
- Down payment
- Closing costs
- Prepaid costs (taxes, insurance, interest)
- Moving costs
- Mortgage payments
- Mortgage insurance (if applicable)
- HOA fees (if applicable)
Upfront homebuying costs
While some of these costs are paid after the sale is completed and you’ve already moved in, some expenses are due before you get the keys. Here are some of the key upfront homebuying costs you should be aware of:
| Homebuying Cost | Cost Breakdown (% of sale price) | Total Cost ($440,000 house) |
| Earnest money deposit | 1%-3% | $4,400-$13,200 |
| Down Payment | 3%-20% | $13,200-$88,000 |
| Closing costs | 2%-5% | $8,800-$22,000 |
| Moving costs | – | $1,250-$5,000+ |
Earnest money deposit
Earnest money is paid after a seller accepts your offer on a house. The earnest money deposit assures the seller that you’re acting in good faith as a buyer. The money serves as a form of compensation if you end up backing out of the deal without a valid reason. It typically ranges from 1% to 3% of the home price. For a $440,000 home, expect to pay $4,400 to $13,200. This amount is usually applied toward your down payment or closing costs.
Down payment
Your down payment is a percentage of the home price paid upfront. While some loans allow down payments as low as 3-5%, some buyers aim for 20% to avoid private mortgage insurance (PMI).
- 3% down: $13,200
- 5% down: $22,000
- 10% down: $44,000
- 15% down: $66,000
- 20% down: $88,000 (avoids PMI)
A higher down payment can reduce your monthly mortgage and total interest paid over time.
Closing costs
Costs associated with the purchase and sale of a home like taxes, title insurance, and lender fees, are considered closing costs. Although they can vary based on the loan program, you can typically expect to pay between 2% and 5% of the purchase price as a homebuyer. For a $440,000 home, you can expect to pay $8,800 to $22,000.
What’s included in closing costs?
Note: earnest money is not a closing cost, though it’s often applied at closing.
Moving costs
Moving costs can vary significantly based on the distance, the size of your home, and whether you hire professionals or opt for a DIY move. Here’s what you can expect:
- Local move (within the same city/state): ~$1,250 on average.
- Long-distance move (out of state or across the country): $2,500-$5,000+
- DIY move: Truck rentals usually cost $100–$1,500, plus fuel and supplies
Additional factors such as packing services, moving insurance, and storage fees can also impact total expenses.
Other costs to consider when buying a house
Prepaid costs
These are upfront payments for property taxes, homeowners insurance, and mortgage interest—usually held in an escrow account and paid on your behalf.
. These include:
- Property taxes: Usually 1-2% of the home price annually, with 2-3 months prepaid at closing.
- Homeowners insurance: Typically costs $1,500-$3,000 per year, with 2-3 months prepaid.
- Mortgage interest: Prorated interest for the remaining days in the month of closing, ensuring your first full mortgage payment aligns with your loan schedule.
Mortgage interest, homeowners insurance. property taxes, and the initial escrow deposit all fall under the umbrella of prepaid costs.
Monthly mortgage payments
Mortgage payments are made monthly to cover the cost of purchasing a house. The mortgage payment has two components: the principal, which gets paid down over time, and the interest.
A mortgage calculator can help you determine how much you can expect to pay each month. For a $440,000 house with a 20% down payment and a 7.8% interest rate, this comes out to a monthly payment of $3,168.
Mortgage insurance
PMI, or private mortgage insurance, is an expense paid by homebuyers that protects the lender in case you default on your mortgage. If you put less than 20% down on your house, you’ll likely be required to pay this additional cost. On average, PMI costs between 0.5% and 1.5%.
- Estimated PMI on a $352,000 loan (20% down): $2,200 to $6,600 annually
Factors such as your credit score and the term of the loan can impact exactly how much you’ll end up paying for PMI. PMI is removed once you reach 20% equity in your home.
HOA fees
Some housing developments, especially townhomes and condos, are managed by organizations known as homeowners associations (HOA), which funds maintenance, security, and more.
These funds are collected through monthly HOA fees, which usually cost you between $200 and $300 per month. In communities that offer lots of extra amenities or cities with a higher cost of living, like San Francisco, you can expect to pay more.
FAQs about homebuying costs
Are there any first-time homebuyer programs that can help with costs?
Yes! Many states and cities offer down payment assistance programs, grants, and low-interest loans for first-time homebuyers. FHA, VA, and USDA loans also provide options with lower down payment requirements.
What other ongoing costs should I consider after buying a home?
Beyond your mortgage, property taxes, and insurance, you’ll also need to budget for maintenance, repairs, utilities, and possibly HOA fees. Experts recommend setting aside 1-3% of your home’s value per year for maintenance expenses.
What is an escrow account, and why do I need one?
An escrow account is a special account held by your lender to cover property taxes and homeowners insurance. A portion of your mortgage payment goes into this account each month, ensuring these bills are paid on time.
How can I reduce my mortgage interest rate?
You can lower your rate by improving your credit score, making a larger down payment, or buying discount points (paying extra upfront to reduce your interest rate over the loan’s lifetime).