If you're planning to buy a home, you probably already know you'll need money for a down payment. But how much money do you really need besides your down payment?

The answer depends on your financing, the home you're purchasing, and the expenses associated with your transaction. In addition to your down payment, you'll want to plan for closing costs, inspections, possible HOA fees, moving expenses, and money to keep in savings after you get the keys.

I encourage buyers to think beyond simply having enough money to close. The goal is to be financially comfortable after closing, too.

Plan for More Than Your Down Payment

I like to divide the money you'll need into three categories: closing costs, expenses that come up before closing, and money you'll want available after closing.

1. Closing Costs

Closing costs are the expenses associated with completing your home purchase and obtaining your mortgage.

Depending on your loan and the property you're purchasing, these may include:

  • Lender fees: Charges associated with processing and originating your mortgage.

  • Title and escrow fees: Expenses related to the title search, title insurance, settlement services, and closing.

  • Appraisal fees: The cost of having the property appraised, which may be paid before closing.

  • Prepaid expenses: Items such as homeowners insurance, prepaid mortgage interest, and property tax deposits.

  • HOA-related fees: Applicable transfer fees, disclosure fees, capital contributions, or other association charges.

Your lender will provide a Loan Estimate outlining anticipated mortgage-related closing costs and a Closing Disclosure showing the final figures before closing.

Don't Forget About HOA Dues

If you're purchasing a home in a community with a homeowners association, it's important to understand both the fees associated with purchasing the property and the ongoing HOA dues.

Most communities charge one-time fees when a property changes ownership. Others may also require capital contributions or additional assessments.

You'll also want to know whether the community has monthly, quarterly, or annual HOA dues.

Not every home has an HOA, and not every association charges the same fees. Which party pays particular fees during closing may also depend on the purchase agreement.

These expenses can make a meaningful difference in your upfront costs and ongoing housing budget.

2. Expenses Before Closing

Some home-buying expenses come up before you reach the closing table.

For example:

Earnest Money Deposit

After your offer is accepted, you'll generally submit an earnest money deposit according to the terms of your purchase agreement.

This deposit demonstrates your commitment to the transaction.

Here's something important to understand: Earnest money generally isn't an additional expense on top of your down payment and closing costs.

If your purchase closes, the deposit is typically credited toward the amount you owe at closing. Whether earnest money is refundable if the transaction doesn't close depends on the contract and circumstances.

Home Inspections

You'll generally pay for your home inspection during the inspection period.

Depending on the property, you may also choose additional inspections, such as a sewer scope, roof inspection, pool inspection, or other specialized evaluation.

Appraisal

Your lender may require an appraisal, and the fee may be collected before closing rather than at the closing table.

The important thing is to understand when you'll need the money, not just how much the transaction will cost overall.

3. Money You'll Want After Closing

This is the category I really don't want buyers to overlook.

It's exciting to purchase a home, but you don't want to use every dollar you have just to get the keys.

Consider setting aside money for:

  • Moving expenses

  • Utility deposits and setup costs

  • Immediate repairs or maintenance

  • Appliances, window coverings, or other household necessities

  • Emergency savings

The amount you'll want to keep in reserve depends on your financial situation, the condition of the home, and your comfort level.

Having money left after closing is part of making a smart home-buying decision.

Can the Seller Help Pay Some of My Closing Costs?

Possibly!

Depending on the property, financing, and negotiations, a seller may agree to contribute toward certain buyer closing costs.

These contributions are commonly called seller concessions.

If you're considering new construction, some builders may also offer incentives toward closing costs or financing, sometimes when you use their preferred lender.

However, these incentives aren't guaranteed, and there may be restrictions based on your loan program or the builder's terms.

Your lender can explain which costs may be covered and any applicable contribution limits.

I prefer to evaluate these opportunities as part of your overall purchasing strategy rather than assuming they'll be available.

Before You Set Your Home-Buying Budget

Before you begin seriously shopping for homes, make sure you've considered four things:

  • Your down payment: How much do you plan to contribute toward the purchase?

  • Your estimated closing costs: Including any applicable HOA-related fees.

  • Your transaction expenses: Inspections, appraisal, and other expenses you may need to pay before closing.

  • Your remaining savings: How much money do you want available after purchasing your home?

Remember, some expenses paid before closing, such as earnest money or an appraisal fee, may already be included in your overall transaction estimates. You don't want to accidentally count the same expense twice.

The goal is to understand both your total cash required and when that money will be needed.

Buying a Home in Phoenix's West Valley

If you're considering a home in Goodyear, Buckeye, Surprise, Avondale, or another West Valley community, the expenses associated with buying can vary from property to property.

For example, one home may have no HOA, while another may be located in a master-planned community with association dues and additional fees.

A new-construction home may come with builder incentives, while a resale property may offer opportunities to negotiate seller concessions.

These differences are worth reviewing before deciding which home is the best financial fit.

That's one reason my Smart Start Buyer Process begins with understanding your goals and financial plans before we start touring homes.

Not Sure How Much Money You Should Have Before Buying?

You don't have to figure everything out on your own.

If you're thinking about purchasing a home in Phoenix's West Valley, let's start with a Smart Start Buyer Call.

We'll talk about your goals, your timeline, and what you're hoping to accomplish. From there, we can discuss your next steps, including speaking with a lender who can help you understand your financing and estimated cash requirements. 

Not ready for a call?

Get Your Free West Valley Home Buyer Guide

[DOWNLOAD THE FREE BUYER GUIDE]

Start with the guide. Explore your options. And when you're ready, we'll create a plan for your next move.

Smart Starts Lead to Smart Moves.

Cinda Rose, REALTOR® | Realty ONE Group
cindarose.com | 623-252-9350