How Much Does It Cost to Buy a House?

Alex Long

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Alex Long

September 14th, 2022
Updated September 14th, 2022

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The cost to buy a typically priced house in the U.S. ranges from $27,589 to $98,704, depending on down payment size and location.

That said, home-buying expenses vary a lot depending on the price and condition of the home. You also have to consider any improvements you'll want to do to the home after closing. And don't forget there are ongoing homeownership expenses as well.

While there are some costs you can't avoid, the good news is that Clever Real Estate can help offset a portion of what it costs to buy a house. After closing, eligible home buyers receive up to 0.5% of their purchase price back. If you work with a Clever agent, you could get $1,780 back on a $356,026 home — the national median home value — through our Clever Cash Back rebate program.

💰Buying a home is expensive💰

Put money back in your pocket with Clever Cash Back. Clever will connect you with a top, local agent and send you a check after closing.

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How much money do I need to buy a house?

To give you an idea of how much you need to save, the chart below shows estimates of all the fees associated with buying a median-priced home.

Expense
Amount
$3,560 to $10,681
$12,461 to $71,205
$3,220 to $4,830
$6,615
$249
$233
$1,250 to $4,890
Varies
Average total
$27,589 to $98,704
Note: All numbers are estimates based on national averages and a median home value of $356,026.

Ultimately, if you're wondering how much you should save before buying a house, it depends largely on the purchase price and the size of your down payment.

For example, if you're putting the traditional 20% down, you'll need to have around $98,704 of the sale price saved up, but with 3.5% down, you'd need $27,589.

Cost to buy a house calculator

To figure out how much it will cost for you to buy your house, use our calculator below.

We pre-filled average costs of each item based on a median-priced home. For any item you aren't sure about for your specific home, these averages will give you an idea of what you might pay.

» MORE: Step-by-step guide of how to buy a house

Upfront costs to buy a house

Earnest money

Buyers generally include an earnest money deposit as part of their offer on a home. This is voluntary but it shows the seller you're serious about buying their property. Typically, buyers offer 1-3% of the home price as earnest money.

The money will be held in an escrow account and is applied toward your closing costs when the sale is closed. If the sale falls through for reasons that aren't your fault, the earnest money will be returned to you.

Think of it like a security deposit. It's money you'll have to come up with, but it's not necessarily an expense because it gets applied to the other expenses mentioned above.

Down payment

The average down payment on a house is 12%.[1] For a $356,026 home — which is the national median value — that comes to $42,723. In most cases, the down payment is the largest expense when buying a home.

Down payments are the initial payments made toward a home that establish your stake in the house — also known as equity. They reduce the amount of your home mortgage loan and protect your lender from losing money if you default.

The size of a down payment can vary quite a bit depending on the buyer and their lender, if they use one.

Here's a look at some of the most common down payment amounts on a range of home prices:

Home price
3.5% down payment
10% down payment
20% down payment
$100,000
$3,500
$10,000
$20,000
$250,000
$8,750
$25,000
$50,000
$500,000
$17,500
$50,000
$100,000
$750,000
$26,250
$75,000
$150,000

Traditionally, a 20% down payment was the standard amount required by lenders for a conventional loan. However, now lenders may let you pay as little as 3% down.

If you're looking for a low down payment option, consider government-backed loans as well. First-time home buyer loans through the Federal Housing Administration (FHA) have a minimum down payment of just 3.5%, and Veterans Affairs (VA) and United States Department of Agriculture (USDA) loans have 0% down payment options.

What's the catch? Well, you may have higher interest rates — which would increase your long-term costs — and there may be additional fees associated with the loan. There may also be more restrictive eligibility requirements.

Reserve funds

Lenders generally require 2–3 months' reserves to close on a home. This means you have enough money in the bank after closing to pay for your bills, including your new mortgage, for 2–3 months.

This isn't technically an expense, because you don't have to spend the money, but it is something you'll need to account for when financially planning to buy a home.

Editor's note

Sometimes lenders will consider cash equivalent funds that aren't in a checking account when verifying that you have the necessary reserves to afford a house. These could include investment accounts, CDs, money markets, or savings accounts.

We encourage you to proceed with caution if you count investment accounts as reserve funds. The lender may think this money is there for emergencies, but you probably want that money to stay put rather than use it for a mortgage payment.

Try to have enough emergency funds to cover a few months of bills in a savings or checking account when you buy your house.

Closing costs

Closing costs are the fees required to complete the sale of a home. The average home buyer pays $6,615 — or 1.86% of the sale price — in closing costs.

The title company in charge of your closing paperwork will provide a breakdown of all the costs and credits that go into your home purchase. These fees are notoriously difficult to figure out, so it's important to know what to expect.

Here are some estimates of common closing costs you can expect to pay for a median-priced home.

Closing cost
What is it?
Amount
Closing fee
Paid to the escrow company or agent for conducting the closing process.
$356
Recording fee
Paid to local government to update land ownership records.
$103
Title service fees
Fees accrued to ensure the property's title is clear.
$668
Lender's title insurance
Protects lenders from future claims on the title of the home.
$260
Owner's title insurance
Protects buyers from future claims on the title of the home.
Typically paid by the seller
Origination fee
Fee paid to the lender for the work involved in processing your loan.
$1,780
Underwriting fee
Lenders charge a fee for verifying your loan paperwork.
$600
Discount points
Money paid to your lender to bring down your loan's interest rate. One point equals 1% of the loan amount.
$2,848 per point
Homeowners insurance
You will be required to show proof of insurance to close on a house. Some lenders require a year of insurance paid at closing.
$140 per month
Prorated property tax
Buyers must pay the property taxes for the portion of the year they own the home.
Varies
Transfer tax
Some states tax the transfer of ownership in a property.
Varies
Average total

$6,615 + taxes
Note: All numbers are estimates based on national averages, publicly available information, and a median home value of $356,026.

» LEARN: The different types of buyer closing costs

Many of these closing costs are relatively small expenses — usually in the low hundreds. Still, don't forget you can negotiate for the seller to contribute to your closing costs. This tactic might not work in hot seller's markets, but in softer markets, sellers will be more motivated to work with you.

The amount sellers can contribute depends on the terms of your financing.

Below are the seller contribution limits toward closing costs (also called concessions).

Loan type
Down payment
Concession limit*
Conventional
Less than 10%
3%
Conventional
10–25%
6%
Conventional
25% or more
9%
FHA loan
3.5%
6%
VA loan
0%
4%
*Note: All concession limits are percentages of the purchase price.

With so many expenses involved in closing on a home, having a great agent that can help you negotiate is the best way to save money.

Contact us at Clever for top agent recommendations.

Inspection

The average home inspection costs about $249, and you pay it when the work is completed. When you get an inspection, a certified inspector will check the home for major issues like a cracked foundation or a leaky roof.

To make sure you're protected if the inspector finds issues, we recommend all home buyers include a home inspection contingency in their purchase offers.

If you have an inspection contingency, depending on what the inspector finds, you can ask the seller to lower the sale price or fix the damage before closing. If they won't agree to new terms or cover the repairs, you can walk away from the sale without penalty.

» LEARN: More home inspection tips for buyers

Appraisal

An appraisal is performed by a qualified professional who looks at your house to take notes on square footage, number of rooms and bathrooms, and amenities. Then, they compare your home with recently sold homes in your area of comparable size and condition to estimate your home's worth.

A home appraisal usually costs around $233. Your lender orders it to make sure your home is worth the amount of your loan.

We recommend including an appraisal contingency in your offer as well. It'll protect you in case the appraisal amount comes in lower than your offer.

With a contingency, if the appraisal is low, you can renegotiate the sale or back out of the deal completely. Without the contingency, you might be on the hook for the difference or lose your earnest money deposit if you walk away.

Moving

Moving won't take place until after closing, so it's not technically a house-buying expense — but it's still something you need to plan for.

The cost to move depends on if you hire professional movers, how much stuff you have, and how far you have to go. That said, the average home buyer spends $1,250 to move locally or $4,890 to move 1,000 miles or more.[2]

Don't forget you may have to pay for storage costs if there's a gap between when you move out of your old home and into your new one.

Furnishings

Furnishing your new home isn't a required expense, and it isn't urgent — but for many people, buying a home means buying new things to fill it with.

Home buyers could spend thousands, or even tens of thousands, of dollars furnishing their new home — or they could spend nothing at all. The amount you spend furnishing a home varies widely depending on your taste and how much you buy for your new home.

If you're refurnishing entire areas of the house, you might find deals online through popular retailers like Modern Bathroom or Whirlpool. For example, Whirlpool offers a 10% discount on the purchase of two or more appliances.

ModernBathroom.com

Ongoing costs of homeownership

After you buy your home, the one-time expenses are over, but the regular costs of owning a home have just begun.

The average homeowner spends between $1,427 and $1,797 on monthly house expenses. This varies a lot depending on the size, sale price, location, and condition of your home.

Here's a breakdown of the common expenses you should budget for with homeownership:

Expense
What is it?
Monthly cost
  • Principle is the amount of money applied to the balance of your home
  • Interest is the amount you pay your lender for your loan
$1,610
  • Policy that protects you if something in your home breaks
  • Required by lender
$140
  • Usually paid annually or every six months
  • Vary widely depending on location and home value
  • Based on assessed value, which is typically less than home value
$323
  • Cost of making routine repairs
  • Also includes inspection/servicing of major appliances like your AC unit and furnace
$296
  • Vary based on how large and efficient your home is
  • Areas with temperate weather may have lower utility costs than homes in very hot or very cold regions
$513
Total

$2,882
Note: All numbers are estimates based on national averages and a median home value of $356,026.

Some homes belong to a homeowner's association, or HOA, which charge a monthly fee as well. The national average for HOA fees is $250 per month, but there are many homes where this doesn't apply.

If your down payment is less than 20%, your lender might also require you to pay for Private mortgage insurance (PMI). This will be added to your monthly mortgage payment and typically costs $155 to $524 per month.

» MORE: The true cost of home ownership

Cost of building a house vs. buying

When buyers realize how much it costs to buy a house, they may wonder if it makes more sense to build a house. There are some reasons why the answer may be no. For example, building a house generally costs more than buying a house that is comparable in size, location, and quality.

Also, loans for building a house — also known as construction loans — are a bit more strict since there is no collateral to back the loan until the house is built. They may also require larger down payments.

That said, new homes require no immediate repairs or replacements and maximize the time until something needs to be repaired. New homes are also customized to your preferences, so the decision really depends on what's important to you.

» MORE: 5 things to know about building a house while selling yours

How to save money when buying a house

If you want to save money when buying a house, you need to decide if you're more concerned with one-time, upfront costs or with long-term, recurring costs.

Get a home buyer rebate

Our top recommendation for saving money on the purchase of your home is to work with Clever Real Estate. You may be eligible for thousands of dollars when you close through our Clever Cash Back program.

Similarly, some buyer's agents or brokerages offer home buyer rebate after your sale closes, so while you can't use it on closing costs, you can put it toward your ongoing homeownership costs.

Get rewarded for buying a home with Clever Cash Back

Working with Clever connects you with top agents in your area, but you also may qualify for 0.5% back on your purchase. For a $350,000 home, you could get up to $1,750.

You could use this money for home repairs, new furniture, or even a vacation!

Fill out the form below and get started now.

Participate in special home buyer programs

A good way to save money up front is to research home buyer programs in your state.

Many states have programs for low-income borrowers, first-time home buyers, veterans, people with disabilities, or in service professions. Participating in these programs may get you a lower interest rate, a down payment grant, or allow for a lower down payment.

» MORE: First-time home buyer programs everyone should know about

Get better financing for your loan

Your mortgage is the major recurring cost that determines how expensive it is to own your home. Shopping around for lenders who offer great rates and low closing fees is a good way to save money, both up front and in the long term.

Get Pre-approved Today!

Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?

You should also try to boost your credit score as much as possible before applying for a loan. You can do this by paying off debts, checking for outstanding issues on your credit report, and increasing your available credit.

Increasing your credit score can help you get a lower interest rate on your home loan, saving you hundreds, thousands, or even tens of thousands on payments over the life of the loan.

You can also lower your interest rate by paying for discount points during closing. This will cost you more money up front but could save you money in the long run by getting you a lower interest rate.

Paying for discount points involves paying more cash at closing in exchange for a lower interest rate on your loan. To decide if this is right for you, ask your lender for estimates on how much you would save on interest payments and how much the points cost.

If you divide the amount you spent on points by the monthly interest savings, it will tell you how long this takes to pay off. For example, if you save $50 per month on interest and the points cost $1,500, it will take 30 months to break even. If you plan to live there longer than 30 months, this is a good idea.

⚠️ BEWARE: Lenders will often tell you how much your total payment decreases by paying points, but that includes a lower interest payment AND a lower principle payment. Be sure to find out how much you save on interest alone, since that is the only money you actually save by paying points.

Use no-closing cost financing

"No-closing cost financing" is actually a misleading term. Sometimes lenders will allow you to lump the closing costs into the balance of the loan, meaning that you end up paying for these over the life of the loan rather than all at once up front.

This could end up costing you more money in the long run, but it could be an option for bringing down the up-=front cost of buying a house — this is most important for buyers who are a little tight on funds to get started.

Buy a turnkey house

The term turnkey basically means a house is ready to go "as is" and doesn't need any work. This is an underappreciated way to save, because people don't often account for the money they spend on improvements shortly after closing on a house.

» MORE: What is a turnkey home?

Painting a new color, replacing floors, and doing some landscaping are all wonderful ways to make a home your own, but they also cost money. Buying a home that doesn't require much work will keep your immediate costs down and potentially save you money down the road.

If you want to do some work to the house, you can also save money by shopping around for top local professionals. HomeAdvisor lets you compare rates from contractors in your area so you can find someone that fits your budget.

Work with a top agent

Working with someone who has local expertise and knows how to negotiate the best deal possible for you is another great way to avoid spending more than necessary.

Clever connects you with agents that know the areas you’re interested in and can provide hyper-local insights. We can help you get a competitive edge in a tight market, negotiate on your behalf to reduce closing costs, and even help you earn cash back after closing. Find a Clever agent today!

FAQs

Home buyers should expect to spend between $27,589 and $98,704 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.

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.

The average cost to own a home is between $1,427 and $1,797 per month, though this varies widely depending on the size and location of your house. Since your mortgage is likely to be your largest monthly expense, it is also very important what your loan balance and interest rate are.

Related links

ARTICLE SOURCES
[1]

Bankrate.com. "Average down payment for a home." Accessed Sept 12, 2022. Updated April 26, 2022.

[2]

Moving Cost Calculator. "Moving Cost Calculator for Moving Estimates." Accessed Sept 12, 2022.

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