So how much, exactly, do you need? Here\u2019s how to figure it out.<\/p>\n Most people buying a house will need to finance a good portion of the sales price. Your down payment and credit score<\/a> will influence the interest rate, loan amount, and type of loan you\u2019ll be able to qualify for.<\/p>\n According to the Federal Housing Finance Administration (FHFA), one mistake many buyers make is taking the first loan they are offered because they don\u2019t realize that they can shop around. \u201cOn any given day, lenders and brokers may offer different interest rates and fees to different consumers for the same loan, even when those consumers have the same loan qualifications,\u201d the FHFA cautions in their report<\/a>.<\/p>\n There are also different types of mortgages with varying features. Shop around to make sure you\u2019re getting the best possible deal.<\/p>\n According to the November 2019 U.S. Census, the average home price is $299,400.00<\/a>. The 2019 National Association of Realtors (NAR) \u201cProfile of Home Buyers and Sellers\u201d says that first-time homebuyers pay an average down payment of 6%<\/a>.<\/p>\n Based on our average purchase price of $299,400, your down payment would be $17,964.<\/p>\n If you think you need to enlist help to repair your credit, be aware that anything a credit repair service can do legally<\/a>, you can do yourself. \u201cOnly time and a personal debt management plan will improve your credit,\u201d says the Federal Trade Commission which offers information about how to repair your credit, including a sample letter to send when disputing errors.<\/p>\n When looking at your financial picture, the first thing to do is get a copy of your credit report<\/a>. Everyone is entitled to one free report a year from each of the three credit agencies (Experion, TransUnion, and Equifax). The only official site where you can find all three is annualcreditreport.com<\/a>.<\/p>\n Be mindful of other websites offering free credit reports or scores. They aren\u2019t part of the legally mandated free credit report program<\/a>.<\/p>\n Once you have your credit reports, check them for errors. Request that any inaccuracies or mistakes be investigated. As well as paying bills on time, credit agencies also take into consideration how much total credit you utilize<\/a>, so paying down debt can be another good way to increase your credit.<\/p>\n When considering how much money you need saved to buy a house, don\u2019t forget to take into consideration the time you\u2019ll need to spend looking for that house. Will you need to take time off from work in order to do so? Will you spend extra for transportation (gas or otherwise) to view multiple properties?<\/p>\n Every buyer is different as far as their shopping habits go. As Shal Shahani<\/a>, a top Boston-area real estate agent, says, \u201cIt\u2019s not a question of how many houses you see, it\u2019s just seeing the right house.\u201d<\/p>\n Some people, Shahani says, have the type of personality where they think they shouldn\u2019t buy the first house they see because they haven\u2019t seen enough or been educated enough. \u201cWe tell those buyers that it\u2019s fine to keep looking,\u201d Shahani continues, \u201cBut understand that if the first house you\u2019ve seen checked all your boxes, you\u2019re going to be comparing it to every other house.\u201d<\/p>\n According to a July 2019 report from ClosingCorp, a data and technology provider for mortgage and real estate services, the national average closing costs are $5,779, or 1.96% of the average sales price of $294,164.<\/p>\n Using our home purchase price of $299,400 that would be $5,868.<\/p>\n A Closing Disclosure<\/a> will be delivered to the buyer\/borrower on all purchase transactions at least three days prior to loan closing. This Closing Disclosure will list all fees and costs associated with the home sale for both the seller and the buyer. You can get more information and download an interactive copy<\/a> of the Closing Disclosure from the Consumer Financial Protection Bureau website.<\/p>\n Here\u2019s the breakdown (on average) of some of the most common settlement charges<\/a>.<\/p>\n Home appraisals are necessary (and required by the lender) in order to secure a loan for a purchase. An appraisal states officially what a property is worth<\/a>, taking into consideration things like market value, how much the house has sold for in the past, land value, and cost of any home improvements. No bank or lender will approve a loan amount that is higher than what the house is \u201cworth.\u201d<\/p>\n A survey is a document that reviews and details all of your property lines<\/a>, including all structures, improvements, and land. It shows existing property lines as well as any infringements or encroachments on those lines. While land surveys are public records<\/a> available through your county records office, if a property hasn\u2019t been surveyed in a while or no previous survey can be located, a new one often needs to be conducted <\/a>(by a licensed surveyor).<\/p>\n Home inspections, while generally optional, are conducted so that you fully understand the condition and quality of the home you are buying. While a lender will rely on an appraisal to determine your home\u2019s value, an inspection allows you to know upfront exactly what you are buying before you are fully bound by the purchase contract.<\/p>\n Even if you\u2019re paying cash, it\u2019s a good idea to get a home inspection done<\/a> by a certified inspector. A thorough home inspection will provide you with most everything you need to know about your new home\u2019s flaws, from small repairs to big problems.<\/p>\n Once you know all the areas that need attention, you can try and negotiate for the seller to pay for certain repairs before closing. They can, of course, refuse. If this happens, research what those repairs are going to cost you<\/a>. Something major, like a new roof or a new heating\/cooling system, could be close to $10,000 each. Make sure you have money set aside for any repairs that can\u2019t wait \u2014 or be ready to back out of the deal.<\/p>\n Lenders will require title insurance for the portion of your home\u2019s value that is financed. Title insurance protects against any unforeseen claims against the title. For instance, if there is an old sale document missing a signature or a lien on the property, title insurance covers the cost of sorting that out (court costs, settling the lien) as well as the full value of the loan if there is a valid claim.<\/p>\n It\u2019s also advisable to take out title insurance<\/a> for the portion of the house you own outright, as the lender\u2019s policy won\u2019t cover that.<\/p>\n Texas (one of the highest) has a property tax rate of 1.81%<\/a>, so annual taxes on a $299,400 home would be $5419.14. The state of Louisiana (the lowest) has a tax rate of 0.18%, meaning annual property taxes on a $299,400 house would equal $538.92.<\/p>\n If the seller has paid their property taxes for the entire year (which in most cases they will have), your settlement will include a line of property tax reimbursement to the seller for whatever time remains in the year. Real estate taxes are generally paid annually at the beginning of the year.<\/p>\n Homeowners insurance varies by state and amount<\/a>, with an average cost of $1,737 <\/b>annually for a $300,000 house <\/a>with a $1,000 deductible and $300,000 in liability.<\/p>\n Cash reserves: Two months’ worth of mortgage and escrow payments. For our example of a $299,400.00 home with 6% down, the average monthly mortgage would be about $1,303 and your average escrow payment would be between $188 and $525. Most lenders require two months\u2019 worth<\/a> of mortgage and escrow payments in your checking and savings accounts. So, two months\u2019 reserves would equal between $3,102 and $3,656<\/b>.<\/p>\n So you\u2019ve made it through your closing and are now standing in the doorway of your new house, keys in hand, with no one else around. Congratulations, you\u2019re a new homeowner! Many buyers forget \u2014 or aren\u2019t aware \u2014 that there are still more expenses to think about after the closing. Here are some other situations and scenarios to consider when figuring out how much money to save to buy a house.<\/p>\n Moving costs depend on a variety of things;<\/a> How many rooms you are moving from\/to, whether you do the packing yourself and how far you\u2019re moving (across town or across the country). According to HomeAdvisor, the average cost of hiring movers is between $583 and $1,602, or $25 to $50 per hour.\u00a0<\/a><\/p>\n If you aren\u2019t able to move in immediately, calculate the costs for storage of your possessions and hotel or rental living if needed.<\/p>\n Average storage costs range between $110 and $225 per month, depending on size<\/a> and whether or not you rent a climate-controlled space.<\/p>\n The average hotel cost of $133 per night varies, of course, by location<\/a> and the caliber of the hotel.<\/p>\n Home repair and maintenance costs an average of $2,994 annually, based on 1% of home value <\/a>of $299,400. For home upgrades, you could spend a lot less or a lot more \u2014 $345 to $13,000 depending on whether you just want some new furniture or an entirely new deck.<\/p>\n In a 2017 study, The National Association of Home Builders (NAHB) found that new homeowners tended to spend about $4,000 more during the first two years after buying than existing homeowners.<\/p>\n Some big-ticket items include appliances \u2014 especially clothes washers and dryers \u2014 and lawn maintenance equipment. A new home often also means new furniture. According to the NAHB report, during the first year of homeownership, new homebuyers spend on average $687 on living room chairs and tables, $345 on kitchen and dining room furnishings, and $634 on bedroom furniture, including mattresses and box springs.<\/p>\n Average costs of some home upgrades include<\/a>:<\/p>\n Most financial advice recommends that you have at least three months\u2019 worth of expenses saved<\/a> in an emergency fund. Based on a median household income of $60,293<\/a>, that works out to $15,073. A February 2019 survey by Bankrate, though, showed that only 3 out of 10 Americans<\/a> actually had more money in an emergency fund than in what they owed in credit card debt.<\/p>\n When all of this is added together, the average amount of money you need to save to buy a house falls somewhere around $28,774. This amount includes some cash reserves, but not a significant emergency fund. If you add a $15,000 emergency fund, the number goes up to $43,774.<\/p>\n All in all, buying a house will likely be one of the largest purchases you\u2019ll make in your lifetime. But with solid planning, research, and number crunching,\u00a0 you\u2019ll be able to figure out how much you need to save to make your homeownership dream come true (and still have a little something leftover.)<\/p>\n Header Image Source: (Michael Longmire \/ Unsplash)<\/em><\/p>\n All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement or any affiliation with HomeLight.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":" The first question most people ask before they start shopping for a house is: How much money do I need to save to buy a house? Do you know the answer?<\/p>\n","protected":false},"author":148,"featured_media":15095,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[192,620,624],"tags":[],"class_list":["post-15078","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-for-buyers","category-buy-house","category-saving-up"],"acf":[],"yoast_head":"\n![\"An](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/03\/how-much-to-save-for-a-house-1-666x381.png\")
<\/a>Financing<\/h2>\n
Down payment: $17,964<\/h3>\n
Credit repair services (if needed): Free<\/h3>\n
Home search costs: $25 to $500<\/h3>\n
![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/03\/how-much-to-save-for-a-house-3-666x381.png\")
<\/a>Closing costs: $5,868<\/h2>\n
Closing Disclosure<\/h3>\n
Mortgage fees<\/h4>\n
\n
\n
\n
\n
Appraisal ($300 to $650) and survey ($155) fees<\/h4>\n
Inspection: $300 to $1,000<\/h4>\n
Title insurance: $175 to $900 per $100,000 in home value<\/h4>\n
Taxes ($538 to $5,658), insurance ($1,737), and cash reserves ($3,102 to $3,656)<\/h4>\n
![\"A](\"https:\/\/www.homelight.com\/blog\/wp-content\/uploads\/2020\/03\/how-much-to-save-for-a-house-2-666x381.png\")
<\/a>Costs beyond the closing\u00a0<\/b><\/h2>\n
Moving costs: $538 to $1,602<\/h3>\n
Storage costs ($110 to $225 per month) and hotels ($133 per night)<\/h3>\n
Repairs, maintenance, and upgrades: $2,994 and up<\/h3>\n
\n
Emergency fund: $15,073<\/h3>\n
The grand total: $28,744 to $43,774<\/h2>\n