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Budgeting Beyond the Home’s Sales Price

Determining how much home you can afford takes some number crunching. Sure, you should look at the listing price — but that’s only one part of the equation. In reality, there are dozens of other expenses you’ll face as a homeowner.

So what should you consider when budgeting for a home purchase? These costs are a good place to start:

  • Down payment — Depending on what type of loan you’ve secured, you’ll need anywhere from 2 to 20 percent of the sales price to put down on closing day.
  • Moving expenses — Whether you’re moving cross-country or down the street, you’ll likely have some moving costs to cover — truck rentals, movers, storage or even just boxes and tape. Make sure to budget for these items up front.
  • Closing costs — There are a number of closing costs you’ll need to cover; these vary from state to state and lender to lender. You should receive a breakdown of these estimated costs as closing day approaches.
  • Home and mortgage insurance — You’ll definitely need homeowner’s insurance to protect your new investment. Depending on what type of loan you have, you may need mortgage insurance as well.
  • Property taxes — Unlike renting, homeowners have to pay property tax at the beginning of each year. Depending on where you live, you might be able to pay in installments.
  • Repairs and maintenance — From broken dishwashers to leaky roofs, there’s always something that needs fixing when you own a home. Likewise, regular maintenance costs, like lawn care, should be budgeted for.

Try to understand the full scope of a home’s cost — both now and over time. Make sure you have a clear picture of what you can and can’t afford.

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