Complete Budget Breakdown for the Home Buying Process in 2026

Buying a home involves far more upfront cash than most first-time buyers realize. The down payment is the headline number, but closing costs, inspections, moving expenses, and immediate repairs can easily add 3-5% of the purchase price to what you need on day one.

Here's the complete budget breakdown for buying a home.

The Down Payment: What You Actually Need

3% down (conventional loan, some programs): Minimum for many conventional loans, particularly Fannie Mae HomeReady and Freddie Mac Home Possible programs designed for moderate-income buyers. On a $350,000 home: $10,500.

3.5% down (FHA loan): Federal Housing Administration loans are popular for first-time buyers with lower credit scores (580+ qualifies for 3.5% down; 500-579 requires 10% down). On a $350,000 home: $12,250.

10% down: Reduces your loan size significantly, may avoid some PMI surcharges, and shows stronger purchase offers. On a $350,000 home: $35,000.

20% down: Traditional target. Eliminates Private Mortgage Insurance (PMI), which costs 0.5-1.5% of the loan amount annually until you hit 20% equity. On a $350,000 home: $70,000. PMI savings at 1% rate: $2,800/year.

The PMI calculation: Is saving 20% worth it versus buying sooner with less down? If you'd spend 3-4 years saving from 10% to 20% while paying rent, calculate whether the PMI cost plus buying sooner (capturing any appreciation and locking in today's price) beats the savings from eliminating PMI. In rapidly appreciating markets, getting in earlier often wins.

Closing Costs: The Often-Forgotten Budget Item

Closing costs are paid at the closing table and typically run 2-5% of the purchase price. On a $350,000 home, that's $7,000-$17,500.

What's included in closing costs:

Lender fees:

• Origination fee: 0.5-1% of loan amount ($1,750-$3,500)
• Discount points (optional — paying upfront to lower your interest rate)
• Application and underwriting fees: $300-$600

Third-party fees:

• Appraisal: $300-$650 (required by lender to verify home value)
• Title search and title insurance: $1,000-$3,000 (protects against ownership disputes)
• Survey: $300-$700 (not always required)
• Attorney fees (required in some states): $500-$1,500

Prepaid items (not technically fees — money you'd pay eventually):

• Homeowner's insurance: First year's premium paid upfront: $800-$2,000
• Prepaid interest: Interest from closing date to end of month
• Escrow setup: 2-3 months of property taxes and insurance into escrow account

Getting a Loan Estimate: Within 3 business days of mortgage application, lenders are required to provide a Loan Estimate showing all expected closing costs. Compare Loan Estimates from 3+ lenders. Costs vary significantly.

Seller credits: In some markets, buyers can negotiate seller-paid closing costs (seller credits). This increases the purchase price but reduces your cash outlay. Common in buyer's markets or when sellers are motivated.

Home Inspection and Related Costs

General home inspection: $300-$600. A professional inspector examines the home's condition — structure, electrical, plumbing, HVAC, roof, and more. Never skip this. The few hundred dollars is the best money spent in the entire process.

Specialty inspections (as indicated):

• Pest/termite inspection: $75-$150
• Radon test: $150-$300
• Mold inspection: $300-$600
• Sewer scope: $150-$300
• Roof inspection (separate from general): $150-$300
• Foundation specialist (if concerns identified): $300-$700
• HVAC specialist (if system is aging): $100-$300

Don't skip inspections to win a bidding war. "Waiving inspection" to make your offer more competitive has caused enormous financial pain for buyers who purchased homes with significant hidden defects. At minimum, negotiate an "information only" inspection with no contingency rather than waiving entirely.

Moving Costs

Add your moving budget based on distance and volume of belongings (see our full moving cost guide):

• Local DIY move: $200-$600
• Local professional movers: $800-$2,500
• Long-distance move: $3,000-$10,000+

Immediate Post-Purchase Costs

New homeowners consistently underestimate what they'll spend in the first 30-90 days:

Immediate necessities:

• Locks rekeyed or replaced: $150-$400 (security — you don't know who has keys)
• Window coverings (blinds, curtains — usually not included): $200-$800 depending on window count
• Light fixtures if not included: $100-$500
• Hardware (shower curtain rods, towel bars, etc.): $50-$200

Likely first-year repairs: Plan for 1-2% of purchase price in home maintenance and repairs annually. On a $350,000 home, that's $3,500/year. New homeowners often spend more in year one because they're correcting deferred maintenance from the seller.

Appliances: If the home didn't include washer, dryer, refrigerator, or other appliances, budget accordingly. A basic set costs $1,500-$4,000.

The Full Cash-Needed Calculation

Let's use a $350,000 home with 10% down as an example:

Plus 1-year maintenance reserve: $3,500

Qualifying for the Mortgage

Debt-to-income ratio (DTI): Lenders calculate your total monthly debt payments (all loans, credit cards, the new mortgage) divided by gross monthly income. Conventional loans generally want this below 43%; many lenders prefer below 36%.

Credit score: The higher your score, the better your interest rate. Below 620 is difficult for conventional financing; 740+ gets the best rates. The difference between 680 and 760 on a $280,000 mortgage can be 0.5-0.75% interest rate — roughly $80-$120/month for the life of the loan.

Get pre-approved before house hunting: Pre-approval (not pre-qualification) shows sellers you're a serious buyer and identifies any issues with your application before you fall in love with a house.

Hidden Ongoing Costs

New homeowners are often surprised by monthly costs beyond the mortgage payment:

• Property taxes (typically escrowed): Varies dramatically by location ($2,000-$15,000+/year)
• Homeowner's insurance: $800-$2,000/year
• HOA fees if applicable: $100-$1,000+/month
• Utilities (often higher than renting): Varies by size and climate
• Lawn care, snow removal: $0 (DIY) to $1,500-$5,000/year
• Maintenance and repairs: Budget $3,500-$7,000/year on a $350,000 home

The true cost of homeownership significantly exceeds the mortgage payment. Budget realistically before committing.