If you’re thinking of buying a new home soon, you’ve probably thought about the maximum price you can afford and the down payment you can afford. And if you’re planning to finance the purchase, the monthly mortgage payment might also be on the list of big expenses you’ve already started accounting for.

In terms of immediate expenses, these are definitely the big three. But the path to home ownership is littered with other “hidden” costs that most people overlook or are unprepared for, especially if they are first-time buyers. Here is a checklist of the most common; be sure to budget for them, to avoid any surprises once the contract is signed and the countdown to closing has begun. And, as a bonus, some things to expect once you move into your new home.

Closing costs

Closing costs must be paid before you legally take possession of the home. A variety of fees for separate services (loan origination, underwriting, title search, deed registration, etc.), these expenses primarily relate to obtaining a mortgage, although some help with verifying ownership, the condition and value of the home. Although they vary widely from state to state, closing costs are generally between 2 and 5 percent of the mortgage amount. For example, if you borrow $420,000 to buy a house, your closing costs could range from $8,400 to $21,000.

Home evaluation and inspection

You are not required to have your home professionally inspected before closing your purchase. However, it could be worth it, especially if there are issues with the property that aren’t obvious and require further investigation to identify. On average, potential buyers pay about $339 for home inspections, according to contractor finder Angi. However, this rate may vary depending on the location, age and size of the house.

serious money

If you put an offer on a house and it’s accepted by the seller, you’ll need to follow up with a deposit within a day or two. This is a good faith filing demonstrating your intent to honor the contract of sale and ultimately purchase the property. There is no law requiring a down payment to be made on a prospective home purchase, but at least 1% of the purchase price is standard. In some cases, potential buyers offer to make even larger deposits to convince sellers.


Escrow accounts serve two purposes: to hold the deposit and to make payments for property taxes and home insurance. The deposit is applied to the purchase price at closing. But if there is a problem with the house, as revealed during the inspection, the funds will be refunded to you.

Once you’ve closed on your home, you can also elect or be required to fund a mortgage escrow account, which holds funds from your mortgage payment that are reserved for future property taxes and home insurance bills. When bills become due, the mortgage company will pay them from this account on your behalf.

Title fees

Title insurance may not be required, although most mortgage lenders require you to purchase it. This coverage protects the buyer and lender from potential problems with the deed once you assume ownership. Otherwise, you will be responsible for covering all legal fees if the home has liens or other types of serious encumbrances against it – what is called a “cloudy” or “unclear title”. Expect to pay a few hundred dollars for title insurance.

Transfer taxes

Also known as deed transfer tax, real estate transfer tax is assessed when real estate changes hands. The fee is determined by the state or municipality where the property is located and is usually a percentage of the sale price of the home.

Moving costs and expenses

Well, the closing has taken place. Congratulations, owner! Now, however, you’ll have to incur moving costs – and if you’re smart, you’ll start accumulating them up front, as soon as you sign the purchase contract, in fact. On average, in the range of $868 to $2,383, you’ll spend $1,624 to hire professional movers, according to HomeAdvisor. It’s for a local move. A long-distance trek costs an average of $6,060 if you’re traveling across the country, notes Fix.

New furniture

Yes, we know you’re going to be repurposing everything you have and raiding your parents’ attic, but it’s just as important to factor in the cost of furniture, especially if you’re upgrading to a bigger house or you are moving from an apartment to a house. And then there are new light fixtures, like window treatments and ceiling fans. The average homeowner spends $16,000, HomeAdvisor Reports.

Ongoing property taxes and HOA fees

OK, so much for the new house stuff. Now let’s move on to ongoing homeownership costs.

First things first: property taxes imposed by your county or city. You can either pay the property taxes yourself or have them blocked from your monthly mortgage payments. In any case, you must include them in your budget.

HOA fees are another story: you’ll have to pay them directly to the homeowners association monthly, quarterly, semi-annually, or annually. They typically cover costs associated with garbage collection, shared utilities, security, and landscaping.

Home maintenance and repairs

It’s easy to overlook home maintenance and repair expenses. But trust us: they’re going to happen, and if you’re used to apartment living, some of them — like roof repairs, gutter cleaning, heating costs, and lawn mowing — may not occur immediately. And some can get quite expensive, especially if they’re repairs related to extreme weather, a natural disaster, or a major problem that causes major damage to your property. You might also list home insurance premiums in this category.

Emergency fund

Most experts recommend having at least three to six months of current household expenses in an emergency fund. If you don’t have this amount of reserves before buying a home, focus on building up your cushion as soon as possible to avoid the risk of foreclosure if life occurs and your income is suddenly reduced.

Adequate cash reserves can also be useful if you need to cover the cost of unexpected repairs that your insurance won’t cover or that are insufficient to cover the policy deductible.

Conclusion on the hidden costs of the house

Buying a home is an exciting time. It also involves one of the biggest purchases you are likely to make. Thus, you should familiarize yourself with the hidden – or, perhaps we should say, less than obvious – costs that often surprise many homeowners. And that can lead to them becoming housing poor: a perilous financial situation in which you can cover the costs of the house, but nothing else.

To avoid this fate, start building your bank account to be prepared for these costs and make sure your finances are in good shape before buying a home. That way, you can shop with confidence and be ready to take on the financial responsibilities that, along with the joys, come with home ownership.