8 hidden costs of buying a home

The journey to becoming a homeowner starts long before you make an offer on a house. Figuring out your homebuying budget—and factoring in the hidden costs that are often overlooked—can help you set clear savings goals, create a plan to achieve them, and go into the homebuying process with confidence.

The importance of creating a comprehensive homebuying budget

You’ve determined a price range for your home and are excited to go home shopping. Before you get ready to make an offer, consider the hidden costs of buying a home that you may not have thought about when you first decided on your price range. Factoring these additional costs into your final budget can reduce surprises and help you feel confident when making an offer.

Although some of these could be covered by the seller or included in the cost of your mortgage, here are eight potential upfront expenses that every homebuyer should know about:

1. Closing costs: 2% – 6% of mortgage^{Disclosure 1}

Closing costs can be a significant expense that’s often overlooked. Being aware and prepared by factoring it into your homebuying budget can help save you from sticker shock. You can think of closing costs as an umbrella term that covers expenses like attorney fees, underwriting fees, and title searches.

Your exact closing costs can vary, but they’ll typically amount to 2% – 6% of the home loan.^{Disclosure 1} For example, if the mortgage you’re taking out is for $350,000, you could expect to be responsible for $7,000 to $21,000 in closing costs in addition to your down payment.

How homebuyers cover their closing costs can vary—some sellers will contribute to your closing costs as part of the negotiations, and some lenders may include them in the mortgage loan. You can ask your lender and real estate agent what to expect when it comes to closing costs and loan fees so you have a clear picture ahead of your home purchase.

2. Home inspection: $300 – $500^{Disclosure 2}

Most real estate experts agree that a home inspection is a must before you close on a home—even if it’s new construction. Home inspections commonly range from about $300 to 500,^{Disclosure 2} but the exact cost depends on factors like location, the property’s square footage, and what’s included in the inspection. For example, some standard home inspections may not include the roof, so you’d need to pay extra for a roof inspection.

You may quickly fall in love with a place and be eager to close on it, but it’s important to consider what a home might be hiding. Inspections can uncover things that the average homebuyer can easily miss, like issues related to electrical, plumbing, or pests.

Knowing the ins and outs of your future home’s health can give you peace of mind and save you from spending big on unexpected repairs. It can also give you clarity as to whether a home is right for you, your family, or your toolbox. And if the inspection reveals something that needs attention, that knowledge can give you leverage in negotiations or help you know if it’s time to walk away.

3. Land survey: $376 – $768^{Disclosure 3}

If you’re looking to buy a condo, you may not need a land survey (sometimes called a property survey). But if you’re buying a house or even a townhome, the survey may be recommended or even required.

Like a home inspection, a land survey helps you get a more complete picture of the background info on your potential home and the property it sits on.

With a land survey, you get official details like:

• Where the property line sits
• The exact dimensions of the home
• The exact size of the property

This information can help you be prepared when it comes to things like building a fence or maintaining tree growth and landscaping. Although land surveys are not always required, the more you’re prepared for property line “what-ifs,” the more confident you may feel during and after the process.

4. Appraisal: $314 – $423^{Disclosure 4}

Before your home loan is finalized, your lender will probably require an independent appraisal to determine the property’s worth. Mortgage lenders don’t want to be on the hook for a home that’s radically overpriced—and neither do you.

Think of the appraisal as an extra layer of protection. An appraiser will check everything from the cabinets to the closets in addition to looking at the sale prices of nearby comparable properties to ensure you’re not overpaying for your home.

Home appraisals cost $357 on average.^{Disclosure 4} But—similar to a home inspection—the cost of an appraisal varies depending on a lot of factors, like the size of the home, the type of home, and your location. A normal price range is between $314 and $423.^{Disclosure 4}

The appraisal fee often falls to you as the homebuyer, but similar to the home inspection, it’s there to protect you. Getting an appraisal is the only way to determine if the price you’re paying for the home reflects the property’s fair market value.

5. HVAC inspection: $150 – $500^{Disclosure 5}

Heating and air systems are one of the biggest investments when purchasing a home. Although a home inspector will usually check a home’s HVAC to ensure it’s working, they’re typically not experts who can do a thorough inspection. So it can be a good idea—especially if you’re buying an older home or a fixer-upper—to get a specialist to do an HVAC inspection in case there are any big underlying problems.

The average cost of an HVAC inspection is between $150 and $500.^{Disclosure 5} It can cost thousands of dollars to fix or replace a home’s HVAC system—so if the inspection uncovers any issues, it can give you leverage in negotiations with the seller or help you recognize if it isn’t the right house for you. Ensuring that the system is running smoothly can also help you spend less on utilities and energy costs once you’ve moved in.

6. Escrow fees: 1% – 2% of home price^{Disclosure 6}

Most mortgage lenders require you to open an escrow account as part of your mortgage agreement. If you have an FHA (Federal Housing Administration) loan, escrow accounts are mandatory. So you should include room for escrow fees in your homebuying budget so it won’t be a surprise.

Typically, part of your mortgage payments will go into an escrow account as a way of setting aside funds each month for expenses like property taxes and homeowners insurance. Because your lender is also invested in your property and wants to ensure nothing goes wrong, they’ll typically take on the responsibility of making the tax and insurance payments from your escrow account after you’ve closed on your home. (You’re still covering the cost through a portion of your mortgage payments—but you at least won’t have to think about it.) And upon closing, you may have to pay initial escrow fees of between 1% and 2% of the cost of the home.^{Disclosure 6}

7. Moving costs: $500 – $10,000^{Disclosure 7}

With all the moving pieces (pun intended?), it can be easy to forget that you’ll eventually have to, well, move!

Base your moving budget on how far you’re moving, how much stuff you have to move, and whether you’ll hire professionals or rely on a band of buddies. But keep in mind that this is one of the hidden homebuying costs that can vary the most.

A local move from a one-bedroom or studio apartment, for example, may cost between $500 and $1,000. But moving a four- or five-bedroom home’s worth of stuff thousands of miles can easily cost over $10,000.^{Disclosure 7}

If you’re doing some or all of it yourself, factor in the small stuff, too, like boxes, tape, padding, and labels. If you plan to use movers, get quotes ahead of the move date and compare different companies.