The typical cost to buy a house in the US ranges from around $28,405 to $100,415, depending on the size of the down payment and property location. This figure includes all the upfront costs of buying a home — in other words, how much you must pay out of pocket. It does not include any loaned amounts from a mortgage.
The average cost to buy a house can vary significantly based on the quality of the home and the specific property market. Other hidden costs include the cost of necessary repairs and ongoing expenses, like taxes and insurance.
This may seem like a lot to keep in mind, but there are several ways to reduce the cost burden of buying and owning a home. This article will touch on the primary costs of buying a home and how you can save money.
You can also save money by searching for top agents using Clever. With Clever Real Estate, you can meet experienced agents who help buyers like you every day, and you may even qualify for cash back on closing.
How much money do I need to buy a house?
The chart below shows some quick estimates of the upfront cost of buying a house. Note that these are out-of-pocket costs, not the total transaction costs, which include loan amounts.
| Expenses | Amount |
|---|---|
| Earnest money | $3,592 to $10,777 |
| Down payment | $12,573 to $71,848 |
| Reserve funds | $3,820 to $5,730 |
| Closing costs | $6,687 |
| Inspections | $249 |
| Appraisal | $233 |
| Moving | $1,250 to $4,890 |
| Furnishings | Varies |
Cash buyers avoid several loan-associated costs, but they still must pay various closing fees, usually about 1% to 3% of the house price.
The down payment is another factor that significantly impacts the cost of buying a home. If you plan to make the traditional 20% down payment, you need to have more cash on hand than if you were paying 3.5%.
However, a lower down payment means you’ll pay more loan costs in interest and fees.
Cost to buy a house calculator
Our calculator can help you estimate the total costs of buying your home.
All other things being equal, the down payment is the factor that affects upfront housing costs the most. Other costs, such as the appraisal or moving expenses, will vary based on local factors, including the cost of living and property regulations.
You can work with an agent from Clever to get accurate estimates about local home costs in your area. Take a short quiz to meet expert agents near you!
Upfront costs to buy a house
Below is a more in-depth discussion of the various upfront costs of buying a home. Some of these costs might not apply or could vary from case to case.
Earnest money
Earnest money is money the buyer puts down to show their genuine and good faith interest in the property. Typically, the seller deposits earnest money into an escrow account, which is used to cover a portion of the closing costs.
If the sales transaction falls through for some reason outlined in the sales contract, the buyer will get any earnest money deposit back. Otherwise, the buyer may forfeit their deposit if they back out of the sale.
Down payment
Down payment requirements depend on the type of loan. Conventional loans have higher down payment requirements than FHA loans, for example.
According to data from the National Association of Realtors, for buyers using conventional loans, the majority of buyers put down between 10% and 25% of the total cost of the home.[1]
For individuals using FHA loans, the vast majority make a down payment between 3.5% and 10%. Below is a table showing different down payments at different percentages of home value:
| House Price | 3.5% down payment | 10% down payment | 20% down payment |
|---|---|---|---|
| $100,000 | $3,500 | $10,000 | $20,000 |
| $200,000 | $7,000 | $20,000 | $40,000 |
| $300,000 | $10,500 | $30,000 | $60,000 |
| $400,000 | $14,000 | $40,000 | $80,.000 |
| $500,000 | $17,500 | $50,000 | $100,000 |
The standard down payment amount used to be 20%, but certain loans may allow you to pay as low as 3.5%. By paying less than 20%, you may have to pay for additional mortgage insurance.
Reserve funds
Lenders typically require you to have enough cash reserves to cover three to six months of expenses if you suddenly lose your income.
Although you aren’t putting this money down, you still need to demonstrate that you have access to the funds. Acceptable sources of reserve funds can include cash, bank accounts, and savings accounts.
For instance, if your monthly housing costs are $2,400, you’ll need anywhere between $7,000 and $14,000 in liquid reserve funds.
Note: Cash equivalent funds, like investments, may be considered as reserve funds. However, we caution against using these funds, as you most likely want that money to continue to accrue interest instead of using it for housing costs.
Closing costs
Closing costs are the fees required to complete the sale of the home. According to Bankrate, the average home buyer pays an average of $4,661 on closing costs, which comes out to about 1% to 3% of the house purchase price.[2]
Below is a table showing common closing costs you can expect. You should receive a document with a full breakdown of closing costs when buying a home:
| Closing cost | Explanation |
|---|---|
| Closing fees | Paid to the escrow company |
| Recording fees | Paid to government to update local records |
| Title service fees | Fees for checking the property’s title |
| Title insurance fee | Protects the lender from future claims on the home |
| Origination fee | Paid to lender to process your claim |
| Discount point fees | Paid to reduce the effective mortgage interest rate |
| Property taxes | Taxes are prorated for the year you owned the home |
| Transfer taxes | Some states tax title transfers during home sales |
Inspection
During a home inspection, a qualified professional will come to the house to look for major foundational or structural issues.
Home inspections are typically required by lenders, especially for FHA and other government-backed loans.
You may be able to negotiate a clause in your contract that allows you to back out of the sale or pay a lower price if the home fails inspections. You can also ask the seller to make the necessary repairs before completing the sale.
Appraisal
Appraisal fees are paid to an appraiser, who assesses the property to determine its fair market value.
Appraisers look at various amenities, like square footage and number of bedrooms, and compare them to similar recently sold properties to appraise their value.
Moving
Moving is not itself a house-buying expense, but it’s something you’ll have to deal with if you plan to move in right after closing.
Moving costs depend on how much stuff you have, how far you are moving, and whether you hire professional movers, but they can average between $1,000 up to more than $5,000.
If there are gaps between selling your old house and moving into the new one, you may also have to budget for storage costs in the interim.
Furnishings
Furniture is another housing expense that many forget to budget for. It's not as urgent as other expenses, but it’s still important to consider.
You can spend thousands on furniture or relatively little, depending on where you look. It depends on your tastes and the local market for furniture amenities.
Ongoing costs of home ownership
Buying a house is just the first expense — once it’s yours, you’ll have to deal with the ongoing monthly cost of owning a home.
These are the recurring monthly costs you’ll make to pay for your loan and other necessary housing expenses.
| Expenses | Explanation | Monthly Cost (est.) |
|---|---|---|
| Mortgage principal & interest | Paying off your mortgage loan | $2,329 |
| Homeowners insurance | Insures your home in case it’s damaged | $200 |
| Taxes | Taxes set by the county | $213 |
| Maintenance | Maintenance includes repair fees for large systems | $78 |
| Utilities | Vary significantly based on your location and resource use | $347 |
Note that if you make a down payment lower than 20%, you’ll also have to pay for mortgage insurance every month, which can amount to an additional $30 to $70 per payment.
Cost of building a house vs. buying
The costs of buying a house are so high right now that many wonder whether it’d be cheaper to build rather than buy.
Generally speaking, building a house will cost more than buying a house of equivalent size/style.
The reason comes down to the higher construction and labor costs of building, though it may be possible in some cases to build for less than buying.
Even though building can provide more customization, most individuals prefer buying because the price is more certain and takes less time. However, a new house won’t require major repairs, and you won’t have to budget for renovations.
How to save money when buying a house
Given today’s high housing costs, there are several strategies that could lower the cost of housing.
1. Get a home buyer rebate
The most straightforward way to save on closing is to work with Clever Real Estate. With Clever, you can be eligible to recoup hundreds of dollars when closing through our Cash Back program.
You may also be able to secure a buyer rebate through a brokerage or buyer's agent. You can put this money toward paying for the ongoing costs of homeownership.
2. Negotiating price
Another option is to ask for seller concessions. Sellers might provide funds to go towards closing costs or negotiate some other deal.
For instance, it’s common for sellers to provide repair credits to the buyer so they can manage necessary home repairs post-closing.
3. Alternate financing strategies
The main factor determining the total cost of buying a home is your mortgage. You can get a better mortgage by improving your personal finances or by switching to something like a no-closing-cost mortgage to reduce upfront costs.
4: Choosing turnkey vs. fixer
You may find a house you like, but it requires extensive repairs after closing. In many cases, buying a home that is ready as is is a better idea, even if it doesn’t fully fit your desires.
Buying a home “as is” can save money by removing the need for improvements
FAQ
How much does it cost to buy a house?
Home buyers should expect to spend between $28,405 and $100,415 to buy an average house in the U.S. The range varies drastically depending on the size of your down payment and your purchase price.
Use a home buyer calculator to get more precise estimates for your own home purchase.
Is it cheaper to buy a house or build one?
Generally speaking, it is cheaper to buy a house than to build one — at least as far as the sale price is concerned.
Construction loans for newly built homes usually require down payments in the 20-30% range, so it may be closer to the cost of buying if you intend to put more toward a larger down payment.
What is the monthly cost of owning a home?
The average cost to own a home is between $1,377 and $1,750 per month, though this varies widely depending on the size and location of your house. Because your mortgage is likely to be your largest monthly expense, it is also very important to know what your loan balance and interest rate are.
What are the hidden costs of buying a house?
Hidden costs of buying a house include post-purchase expenses like necessary repairs, maintenance, and potential HOA fees.
You also need to account for new furnishings and other ongoing expenses, such as utilities and homeowners' insurance.
How much do you need out of pocket to buy a house?
You generally need to pay at least 5% to 10% of the house value out of pocket when buying a home.
The two main components of out-of-pocket costs are the down payment and closing costs. Other out-of-pocket costs include earnest money deposits and cash reserves.
What fees do cash buyers still pay?
Cash buyers still have to pay insurance and taxes, as well as fees like title registration, recording, and appraisal fees, but they avoid lender fees, like origination or discount points.