Thinking of becoming a homeowner? The down payment and monthly mortgage payment aren’t the only expenses you need to consider. Having an idea of the one-time and ongoing costs to buy and own a house can help you save now and prevent sticker shock later.
Read more: How to use Ally Bank spending buckets for everyday money management
One-time expenses when buying a home
Here’s a snapshot of one-time costs during the homebuying process:
Category | Typical cost |
|---|---|
Down payment | 3% - 20% of home price |
Appraisal fee | Approximately $350 |
Inspection fee | $300 - $400 |
Closing costs | 2% - 5% of purchase price |
Down payment
This expense typically ranges from 3% to 20% of the purchase price, depending on the financing option you choose. You can use Ally Bank savings buckets to allocate funds specifically for your down payment.
Appraisal Fee
Many mortgage lenders require a home appraisal to get an estimate of your home’s market value. These typically cost around $350, but vary based on the location, conditions and size of the property.
Inspection fee
Expect to pay about $300-400 for a home inspection to identify potential issues, depending on the size and age of the home.
Closing costs
Closing costs are typically 2% to 5% of the home’s purchase price. Several expenses go into closing, including lender fees.
Ongoing costs of owning a home
Below are examples of costs you could experience throughout your time as a homeowner:
Category | Typical cost |
|---|---|
Mortgage payment | Varies |
Property tax | <0.4% to >2% of property value annually (varies by location) |
Homeowner’s insurance | Varies |
Private mortgage insurance (PMI) | Varies |
Homeowners association (HOA) dues | $200 - $400/month (if applicable) |
Utilities | Approximately $400/month |
Maintenance | Up to 4% of property value annually (1% for routine maintenance; 1% to 3% for repairs) |
Mortgage payment
A mortgage spreads the cost of a home over an extended period of time, typically between 15 to 30 years. Monthly payments cover both your principal and accrued interest.
Property tax
Property taxes are based on your home's value and location and vary considerably. Across the country, tax rates range from less than 0.4% to more than 2% of the home’s value.
Homeowner’s insurance
There are two main types of homeowners insurance: dwelling and personal property insurance. Dwelling coverage protects your house, while personal property covers the items inside it. Your insurance costs will depend on how much coverage you purchase. When deciding which type of insurance you need, consider how much it would cost to rebuild your home, instead of how much it’s worth.
Private mortgage insurance
If you make a down payment of less than 20%, your lender might require you to get private mortgage insurance. Your rates will likely be 0.2% to 2% of the original loan amount annually.
Homeowner association dues
If you buy property in a community or building that has an HOA, you could pay on average $200 to $400 a month in fees.
Utilities
Don’t forget about all of the recurring homeownership expenses like electricity, water, heat and internet. The average monthly cost for utilities is about $400, but charges will vary depending on your specific conditions and preferences.
Maintenance
Ongoing maintenance and repairs, such as HVAC servicing, roof repairs, plumbing, landscaping and painting, can all add up. While older homes offer great character, they often come with more frequent maintenance needs, so be sure to factor those costs into your homeownership budget.
Unexpected expenses after buying a house
While you can’t predict every extra expense, your budget might need to include:
Yard care: Whether you’re hiring a regular mower or DIY-ing your garden, keep in mind potential property expenses outside the home.
Pest control: Critter control isn’t just for emergencies — you can also budget for regular visits and maintenance.
Home security: From professional security services to remote-monitored cameras, a security system can help protect what matters most.
Appliances: Upgrading your kitchen or laundry? Depending on the style, tier and type you need, your costs will vary.
Furniture: Leave room in your budget for new furniture, whether you prefer to splurge at showrooms or deal hunt at thrift stores.
Renovations: If you bought a fixer-upper (or just want that screened-in porch you’ve always been dreaming of), renovations might be coming down the line.
Total cost of ownership
Buying a home is a big life event — and a big expense. By keeping in mind all the potential costs, you can start saving now so you can focus on the excitement of the moment when it’s time to buy.
