How Much Money Do You Need to Buy a House?

Crystal 

Walker

Content Writer

Most people focus on the down payment and stop there. But the real number, the one that determines whether you can comfortably close and still have money left over, is quite a bit larger than that.

This guide breaks down every cost category and gives you realistic dollar ranges so you can build a savings target you can actually plan around. It is focused on one question: what do you need to have ready before you close?

If you are also looking for tools to calculate your specific number or a pre-approval checklist, the Financing & Affordability hub has both in one place.

The Real Cost of Buying a Home: Beyond the Down Payment

Here is something that surprises a lot of first-time buyers: the down payment is only one piece of the financial picture. Before you close, you will also need to cover closing costs, prepaid expenses, and move-in costs that most people underestimate.

On top of that, once the keys are in your hand, ongoing costs follow you every month.

The good news is that none of this is complicated once you see it laid out clearly. Let's go category by category.

1. The Down Payment: What You Actually Need

The down payment is the portion of the home's purchase price you pay upfront. It is not a fixed number. It depends entirely on your loan type and financial situation.

Here are the most common scenarios:

Conventional Loans Most conventional loans allow down payments as low as 3% to 5%, especially for first-time buyers. The traditional 20% benchmark still matters because it eliminates Private Mortgage Insurance (PMI), but it is not a requirement. On a $350,000 home:

• 3% down = $10,500

• 5% down = $17,500

• 20% down = $70,000

FHA Loans FHA loans require a minimum of 3.5% down and are popular with buyers who have lower credit scores or limited savings. On a $350,000 home, that is $12,250 upfront.

VA Loans Eligible veterans and active-duty military members may qualify for VA loans with zero down payment required.

USDA Loans For buyers purchasing in qualifying rural or suburban areas, USDA loans also offer a zero-down option.

There are also state and local assistance programs that can significantly reduce what you need upfront. This guide to first-time homebuyer programs in 2026 covers what is available and how to find out if you qualify. Many buyers leave this money on the table simply because they did not know what to ask.

If you are still building toward a down payment, these strategies for saving for a down payment break down practical approaches for reaching your goal faster, even on a modest income.

What most buyers misunderstand: Putting less than 20% down is not a financial mistake on its own. It can actually be the smarter move depending on your local market, your savings timeline, and what you plan to do with the capital you preserve. The trade-off is PMI, which we cover below.

2. Closing Costs: The Budget Line Most People Forget

Closing costs are the fees required to finalize your mortgage and transfer ownership of the property. They typically run between 2% and 5% of the home's purchase price.

On a $350,000 home, expect to budget between $7,000 and $17,500.

Here is what is usually included:

• Loan origination fee: charged by the lender for processing your application

• Appraisal fee: a licensed appraiser confirms the home's market value

• Title search and title insurance: verifies the seller has the legal right to sell, and protects you from future ownership disputes

• Home inspection fee: a professional inspector assesses the property's condition

• Prepaid property taxes and homeowners insurance: lenders typically require 2 to 3 months of taxes and insurance upfront at closing

• Attorney fees: required in some states; optional in others

Your lender is required to give you a Loan Estimate within three business days of your application. That document will give you a detailed breakdown of your specific closing costs, so you are not guessing.

For a closer look at each line item and what to watch for, this beginner's guide to closing costs walks through the full picture.

Pro tip: Some buyers negotiate seller concessions to cover a portion of closing costs. Whether that is realistic depends on your market. An experienced agent will know when to push for this and when it could cost you the deal.

3. Your Monthly Payment: Understanding PITI

After closing, your monthly mortgage payment becomes your biggest ongoing cost. It is made up of four components, often grouped under the acronym PITI:

Principal: the portion that pays down your loan balance

Interest: the cost of borrowing, determined by your rate and loan term

Taxes: property taxes, which vary significantly by location and are usually escrowed monthly

Insurance: homeowners insurance, also typically escrowed monthly

Using a $350,000 home as an example, with a 30-year fixed rate, 5% down, and current rates in the 6.5% to 7% range, you might expect:

• Principal and Interest: approximately $2,100 to $2,250 per month

• Property taxes: $300 to $700 per month (varies widely by location)

• Homeowners insurance: $100 to $200 per month

• Estimated total: $2,500 to $3,150 per month

These are illustrative estimates. Your actual payment will depend on your specific loan terms, location, and insurance coverage.

4. Private Mortgage Insurance (PMI): What It Costs and When It Goes Away

If your down payment is less than 20% on a conventional loan, your lender will require PMI. This protects the lender, not you, if you default.

PMI typically costs between 0.3% and 1.5% of the original loan amount per year. On a $332,500 loan (after 5% down on a $350,000 home), that is roughly $83 to $415 added to your monthly payment.

PMI is not permanent. Once you have built 20% equity in the home, you can request to have it removed. Most lenders are required to cancel it automatically at 22% equity.

5. Additional Costs That Catch Buyers Off Guard

Beyond the major budget items, a few other expenses come with homeownership that renters rarely think about.

Home Maintenance and Repairs A widely used rule of thumb is to budget 1% to 3% of your home's value per year for maintenance. For a $350,000 home, that is $3,500 to $10,500 annually, or roughly $290 to $875 per month set aside in a dedicated reserve. Older homes, homes with larger lots, and properties in harsh climates often trend toward the higher end of that range.

HOA Fees If your home is part of a homeowners association, monthly dues can range from $100 to over $500 depending on the community and amenities. Always factor this into your affordability calculation before you make an offer.

Utilities Most buyers focus so hard on the mortgage payment that they forget utilities can add $200 to $400 or more per month depending on the home's size, age, and energy efficiency.

Moving and Setup Costs Professional movers, new furniture, window coverings, small repairs, and the many other things that come up in the first weeks of ownership can easily add $3,000 to $8,000 or more.

6. How to Know If You Can Actually Afford It

Before you start touring homes, it helps to have a clear sense of your budget ceiling. Three things make a real difference here.

Understand the gap between approval and affordability: What a lender will approve you for and what you can comfortably afford are often two different numbers. Lenders calculate risk. They do not account for your other financial goals, lifestyle costs, or comfort with debt. This is one of the most important distinctions to understand before you start shopping, and one of the most common places buyers get into trouble.

Your credit score affects more than you think: Your credit score has a direct impact on the interest rate you will qualify for, which affects every number in this article. This 30-90 day credit action plan is worth a look if you have time before you apply.

Get pre-approved before you shop: Mortgage pre-approval tells you exactly how much you can borrow, what rate to expect, and what your estimated monthly payment will look like. It also signals to sellers and their agents that you are a serious, qualified buyer. The Financing & Affordability hub has a full pre-approval checklist and affordability calculator to help you prepare.

What to Have in Savings Before You Buy

Here is a ballpark view of what a prepared buyer typically has ready before closing on a $350,000 home:

This is a general illustration, not a guarantee. Your actual number will vary based on your loan type, location, lender requirements, and personal situation.

The Next Step: From Your Number to a Plan

Knowing what you need to save is an important first step. Translating that into a timeline, a loan strategy, and a realistic budget for your specific income and market is where things get more personal.

If you want a full walkthrough of the process from financial prep to closing day, the First-Time Buyer Guides and Checklists hub lays out the complete sequence with downloadable tools for every stage.

And when you are ready to connect with someone who knows your market and your goals, PrimeStreet matches buyers with the right agent for their specific situation.

Find your agent match at PrimeStreet

_{This article is for educational purposes only and does not constitute financial or legal advice. Costs, rates, and guidelines vary by location, lender, and individual financial profile. Always consult a qualified mortgage professional for guidance specific to your situation.}