How Much Money Do You Actually Need to Buy Your First Home?

How much money do you need to buy a home? The answer is usually more complicated than a down payment percentage. Your total cash requirement depends on the purchase price, loan program, closing costs, prepaid expenses, assistance, seller credits, and how much savings you want left after closing.

Start with the down payment

Qualified buyers may have mortgage options requiring much less than 20% down. Conventional, FHA, VA, and other programs have different requirements, and some buyers may qualify for down payment assistance. A larger down payment can lower the loan amount, but using every available dollar is not always the best strategy.

Add closing costs and prepaid expenses

Cash to close can include lender charges, title or settlement fees, appraisal, recording costs, prepaid homeowners insurance, property taxes, and escrow funding. Seller concessions or lender credits may offset certain eligible costs, subject to loan-program limits and the purchase contract.

Budget for the expenses outside closing

Inspections, moving, utility deposits, locks, tools, furnishings, and immediate repairs can require additional cash. You should also try to preserve emergency reserves. Owning a home means the repair call comes to you, and a healthy cash cushion can keep a water heater or insurance deductible from becoming a credit-card emergency.

Instead of asking only for the minimum cash needed, compare three numbers: the minimum required, the comfortable amount, and the amount that leaves you with adequate reserves.

Before you decide, review our Homebuyer FAQ for answers about qualification, closing costs, credit, inspections, and the steps between pre-qualification and getting the keys.

Educational information only. Mortgage eligibility, loan terms, rates, down payments, assistance programs, and closing costs vary by borrower, property, lender, location, and market conditions. Pre-qualification is not a commitment to lend.