Home Expenses Include Far More Than Just the Down Payment

March 4, 2021
Last updated:
November 15, 2021
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When deciding to purchase a home, you need to be prepared for all the upfront costs and home expenses that come with this particular real estate transaction. In this article, we will go over some of the major home expenses that you will need to save up in order two comfortably manage your home.

If you are thinking about purchasing your first home in the near future, then you need to be aware of the costs that you are going to take on. When you are looking at the expense of a home, it is very tempting to focus on the sticker price of the house. Even though the down payment is going to be the largest check you are going to write, this is not the only cost that you are going to pay.

There are numerous other costs for which you need to budget as well. By thinking about all of these costs ahead of time, you can make a smart financial decision for you and your family.

Understanding the Upfront Costs

There are a handful of one-time costs and several “prepaid” charges that you will need to budget for starters. In terms of prepaid expenses, you will need to come up with said monies and likely place them in an escrow account. These monies will cover things like interest, insurance premiums, property taxes, and any expenses that accrue from the date you close on your home until your first monthly mortgage payment.

Additionally, you will need to budget for moving costs, closing costs, down payment fees, taxes, and possible discount points. If you opt for a mortgage and discount points to lower your interest rate, you will also pay these upfront. Moreover, there will be lender fees as well, which vary from lender to lender.

Real Estate Taxes and Mortgage Payment

Depending on the part of the country in which you live, real estate taxes can be significant. Often the second-largest expense of owning a home is your property or real estate taxes (after mortgage interest). For example, it is not unusual for even a modest home to cost thousands of dollars in real estate taxes per year. Therefore, even though you have budgeted for your monthly mortgage payment, you also need to budget for real estate taxes.

Usually, your mortgage lender is going to hold your real estate taxes in escrow for you, so you do not end up having to write a large check at the end of the year. Note, if you opt to waive an escrow account, then you will still have to pay these costs upfront at closing. Going forward you will then be required to pay the county and the insurance company directly instead of in combination with your mortgage payment. This can result in large unexpected bills coming due if you don’t budget properly. Moreover, depending on what type of mortgage loan you have and how much money you are to put down, you may also need to budget for mortgage insurance or private money insurance (PMI) as part of your home expenses.

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Homeowners’ Insurance And Utility Costs

Furthermore, you also need to think about homeowners’ insurance and utility costs. Some of the utilities you will have to pay for include internet, phone, cable, gas, electricity, and water. When this is added to your homeowners’ insurance expenses, this can also add up to several hundred dollars per month. Therefore, make sure that you can afford not only the mortgage payment but these recurring monthly expenses as well.

Unexpected Maintenance

Ask any homeowner, and they will tell you that unexpected maintenance and repairs crop up despite your best efforts. For instance,major systems might need to be repaired or replaced. So, it is wise to have a sort of emergency fund for repairs and more.


Finally, if you end up living in a neighborhood that has a homeowners association (HOA), then you will also need to add HOA dues or fees to your home expenses. Likewise, as a homeowner, you will also need to foot the bill for regular maintenance tasks as well. This typically includes things like landscaping or yard work, and so on.

Major Home Expenses Recap

  • Moving Costs
  • Upfront Mortgage Costs
  • Mortgage Insurance/Private Mortgage Insurance (PMI)
  • Mortgage Payment
  • Property Taxes
  • Homeowner’s Insurance
  • Utilities and Home Services
  • Home Maintenance and Emergency Repairs
  • HOA Fees

Budget For Your First Home Accordingly

Ultimately, given all the costs, fees, and expenses mentioned above, you need to have quite a bit of money saved up. In fact, depending on the price of your home, you could easily be looking at $30,000+ just initially (20% down payment, closing costs, upfront expenses,etc.).  Therefore, you should make sure that you sit down with an experienced planner to ensure that you can afford the combined expenses and discuss what you can do to make sure you have the funds available. Otherwise, you might end up being priced out of your first home before you realize it.

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Need Mortgage Assistance or Have Questions?

If you need the assistance of a seasoned mortgage professional, Sammamish Mortgage can help. We are a local, family-owned company based in Bellevue, Washington. We serve the entire state, as well as the broader Pacific Northwest region that includes Idaho, Colorado, and Oregon. We offer a wide variety of mortgage programs and products with flexible qualification criteria. Please contact us if you have mortgage-related questions.

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