One of the most common questions first-time buyers ask is:
“Okay… but how much do I REALLY need to save before I can buy a house?”
Good news: the amount is usually less than people assume.
Let’s break down the real costs in simple, practical terms so you can plan confidently.
1. Down Payment: It’s Not Always 20%
The myth that you must save 20% down just won’t die — but it’s not true for most buyers.
Typical down payments today:
- FHA loan: 3.5%
- Conventional loan: 3–5% for many first-time buyers
- VA loan: 0% (for qualifying veterans)
- USDA loan: 0% in approved rural areas
Example:
On a $300,000 home at 3% down, you only need $9,000, not $60,000.
2. Earnest Money: Usually 1–2% of the Purchase Price
Earnest money is the deposit you put down when your offer is accepted.
It shows the seller you’re serious and committed.
Most buyers pay around 1–2% of the home’s price upfront, and it gets applied to your final costs at closing.
3. Inspection Costs: Typically $500–$700+
Inspections are essential — they help you understand the condition of the home before you move forward.
Depending on the size of the home and any extra inspections (termite, sewer, pool, etc.), expect around $500–$700 or more.
This is also an upfront cost paid shortly after your offer is accepted.
4. Closing Costs: Usually 2–4% of the Purchase Price
This is where many buyers feel surprised.
Closing costs include lender fees, appraisal, title fees, taxes, insurance, and other settlement charges.
Most buyers spend 2–4% of the home’s price.
Example:
On a $300,000 home:
- 2% = $6,000
- 3% = $9,000
- 4% = $12,000
Helpful tip:
In some situations, sellers can contribute toward these costs — depending on the market and negotiation strategy.
So How Much Should You Plan to Save?
Here’s a realistic example for a $300,000 home at 3% down:
- Down payment: $9,000
- Earnest money (applied later): $3,000
- Inspections: $600
- Closing costs: $7,000–$10,000
Estimated total savings needed upfront:
Around $17,000–$20,000
(With some of that—like earnest money—going toward your final numbers.)
Your situation may require more or less depending on your loan type, credit, interest rate, and whether seller concessions are available.
Final Thoughts
Most people think buying a home requires a massive amount of savings, but once you know the real numbers, the goal feels much more achievable.
If you want to figure out exactly how much you would need based on your price range and loan options, I’m happy to run the numbers with you. No pressure — just clarity.
