The honest answer: more than most first-time buyers expect. The down payment gets all the attention, but it's only one of several upfront costs. Here's a complete breakdown of what you actually need to have ready before and at closing.
For the full buyer checklist beyond just cash — credit score, income, documents, pre-approval, and your buying team — see: What Do You Need to Buy a House?
The Full List of Upfront Costs
| Cost | Typical Amount | Notes |
|---|---|---|
| Down payment | 3%–20% of purchase price | VA/USDA loans: $0 |
| Closing costs | 2%–5% of loan amount | Includes origination, title, prepaid taxes/insurance |
| Earnest money deposit | 1%–3% of purchase price | Applied to closing costs at settlement |
| Home inspection | $300–$600 | Out of pocket, not rolled into loan |
| Appraisal fee | $500–$800 | Paid upfront or at closing, lender-dependent |
| Moving costs | $1,000–$5,000+ | Local vs. long-distance varies widely |
| Immediate repairs or updates | Varies | Budget 1%–2% of home value in year 1 |
What You Need at Closing: Real Numbers
Here's how the math works at different price points:
$250,000 Home
| Scenario | Down Payment | Closing Costs | Total Cash Needed |
|---|---|---|---|
| FHA loan (3.5% down) | $8,750 | $6,250–$12,500 | $15,000–$21,250 |
| Conventional (5% down) | $12,500 | $6,250–$12,500 | $18,750–$25,000 |
| Conventional (10% down) | $25,000 | $6,250–$12,500 | $31,250–$37,500 |
| Conventional (20% down) | $50,000 | $6,250–$12,500 | $56,250–$62,500 |
$400,000 Home
| Scenario | Down Payment | Closing Costs | Total Cash Needed |
|---|---|---|---|
| FHA loan (3.5% down) | $14,000 | $8,000–$20,000 | $22,000–$34,000 |
| Conventional (5% down) | $20,000 | $8,000–$20,000 | $28,000–$40,000 |
| Conventional (10% down) | $40,000 | $8,000–$20,000 | $48,000–$60,000 |
| Conventional (20% down) | $80,000 | $8,000–$20,000 | $88,000–$100,000 |
$600,000 Home
| Scenario | Down Payment | Closing Costs | Total Cash Needed |
|---|---|---|---|
| Conventional (5% down) | $30,000 | $12,000–$30,000 | $42,000–$60,000 |
| Conventional (10% down) | $60,000 | $12,000–$30,000 | $72,000–$90,000 |
| Conventional (20% down) | $120,000 | $12,000–$30,000 | $132,000–$150,000 |
Note: Earnest money (1%–3%) is typically paid upfront but credited back at closing toward these totals.
What Goes Into Closing Costs?
Closing costs are not one fee — they're a bundle of charges from your lender, title company, attorney (in some states), and government:
Lender fees:
- Origination fee: 0.5%–1% of loan
- Underwriting fee: $500–$1,000
- Discount points (optional): 1 point = 1% of loan, buys down your interest rate
Third-party fees:
- Title search and insurance: $500–$2,000
- Attorney fee (required in some states): $500–$1,500
- Home inspection: $300–$600
- Appraisal: $500–$800
- Survey (some transactions): $300–$700
Prepaid items:
- Homeowners insurance (typically 12 months paid upfront): $1,000–$3,000
- Property tax escrow (2–3 months prepaid): Varies by location
- Prepaid interest (days from closing to first payment): Based on your rate
Government fees:
- Transfer taxes: Vary widely by state and county (0%–2%+)
- Recording fees: $50–$250
How to Reduce What You Pay at Closing
Seller concessions: In buyer-friendly markets, you can negotiate for the seller to cover some or all of your closing costs. A seller credit of 2%–3% is not uncommon when markets are softer.
Lender credits: You can accept a slightly higher interest rate in exchange for lender credits that offset closing costs. You pay less now but more over time.
Down payment assistance: Many state and local programs help qualifying buyers cover their down payment and sometimes closing costs. Read our guide to buying with no money down for details.
Shop multiple lenders: Origination fees and lender charges vary significantly. Getting 3 Loan Estimates lets you compare total closing costs side-by-side.
How Much Should You Have in Reserves?
Beyond the closing costs, lenders want to see that you have reserves — savings left over after closing. Most lenders require at least 2 months of mortgage payments in savings after you close. More reserves can strengthen your application.
What to budget for year 1 beyond your mortgage:
- Property taxes: 1%–2% of home value/year (if not already escrowed)
- Homeowners insurance: $1,000–$3,000/year
- HOA fees (if applicable): $100–$500+/month
- Maintenance/repairs: Budget 1%–2% of home value/year ($3,000–$8,000 on a $400k home)
What Income Do You Need?
Your income isn't a direct line to "how much you need" — but it determines how much house you can afford.
Most lenders follow the 28/36 rule:
- No more than 28% of gross monthly income on housing (PITI: principal, interest, taxes, insurance)
- No more than 36% of gross monthly income on total debt (housing + car + student loans, etc.)
Example: On a $6,000/month gross income, you can afford roughly $1,680/month in housing costs (28% rule). At 6.5% interest on a 30-year mortgage, that supports a loan of approximately $265,000.
For a detailed affordability calculation by income bracket, read: How Much Mortgage Can I Afford?
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