How Much Money Do You Need to Buy a House?
Decide Whether You Can Afford to Buy a Home
The amount of money needed to buy a house varies for each person and depends on many factors. It’s helpful to consider two aspects:
- The money required for a down payment and closing costs when purchasing the house.
- The money needed each month to cover your mortgage payments and other home-related expenses.
Let’s start by discussing the biggest factor of all:
The Price of the House
The most important factor in determining how much money you’ll need to buy a house is the price of the house itself. The higher the price, the more money you’ll need. For example, a home priced at $500,000 will require a larger financial commitment than one priced at $250,000.
Many of the costs involved in buying a home are tied to its price, such as the down payment. If your lender requires a 10% down payment, you’ll need $25,000 for a $250,000 home and $50,000 for a $500,000 home.
In many ways, the right question to ask is, “How much can I afford?” We can help you answer that question. Use our Quick Quote.
Also, consider getting prequalified for a mortgage with
eCash Mortgage. Prequalification can give you a clear understanding of what you can afford and boost your confidence when you start shopping for homes. Learn more about [how to get prequalified] for a mortgage.
Down Payment
The price of the house greatly influences how much you’ll need for a down payment, but the type of loan you choose also plays a significant role.
- FHA loans might allow you to buy a home with as little as a 3.5% down payment.
- Conventional loans often require higher down payments.
Closing Costs
You’ll likely need funds for closing costs when buying a home. The amount you’ll need depends on factors such as the price of the house, the loan type, the state where you’re buying, and the lender you choose.
Many homebuyers will need to cover closing costs that range between 3% and 6% of the home's price. For a $250,000 home, this means you may need between $7,500 and $15,000.
When you apply for a mortgage with
eCash Mortgage, we’ll provide an estimate of your closing costs before beginning our formal review of your application.
Sometimes, it’s possible to roll some of the closing costs into your mortgage balance to reduce the amount you need to pay upfront. Certain closing costs may also be tax deductible. Please consult a tax professional to determine if you qualify.
Monthly Mortgage Payments
Another crucial factor to consider is the amount of money you’re comfortable paying each month towards your mortgage. Your monthly mortgage payment generally includes principal, interest, taxes, homeowners insurance, and sometimes mortgage insurance.
Your mortgage rate will significantly affect your monthly payment. Use our Quick Quote to estimate your monthly costs.
Other Housing Expenses
Remember, buying a house often comes with additional costs like moving expenses, utility bills, and both planned and unexpected home repairs. It’s always a good idea to have an emergency fund to cover these unforeseen expenses.