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How Much Money Do I Really Need to Save for a Home?

The prospect of buying your first home can be exciting, but thinking about all the money you need to save can be downright daunting. From down payments and closing costs to moving expenses, new furniture, and everything in between—there's a lot to consider.

Still, it doesn't have to be so overwhelming. By having a better understanding of what expenses you need to prepare for (and how much you need to save), you can create a financial plan for buying your first home and close with confidence!

The Basics: Down Payments, Closing Costs, Etc.

Let's start with some of the more obvious costs you need to cover when you buy a home. This includes the down payment that will be required for your mortgage. This is the amount you'll be expected to pay out of your own pocket on the home you're buying.

Your exact down payment amount will depend on the type of mortgage you're taking. Some loan types, such as VA loans, may offer a 0% down payment for some borrowers. Meanwhile, an FHA loan typically requires a minimum 3.5% down payment. If you plan on going the conventional loan route, you can be looking at anything from a 3% up to a 20% down payment on your home at closing.

Other expenses to consider are the closing costs, which include expenses related to property transfer taxes, lawyer fees, and the like. Unless you've negotiated with the sellers to have them cover your closing costs, you can expect to pay about 5% of the home's total sale price at closing. This means if you're buying a home for $250,000, your closing costs will be about $12,500. This can vary, however, so be sure to check with your lender for an estimated amount.

Don't Forget About Inspections, Appraisals, and Testing

Your down payment and closing costs will undoubtedly make up a large portion of your new-home budgets. However, there are some other costs you'll want to plan for that can add up quickly.

Consider, for example, appraisal and inspection costs on your new home. You'll definitely want to have a home inspection done to alert you to any underlying issues before you buy. This could save you a lot of money in the long run by uncovering costly major repairs. A typical professional inspection can cost $300 or more, depending on where you’re looking to buy.

In addition to a basic home inspection, there are specialized tests you may want to have done before you commit to buying a property, such as: Of course, costs may vary by region or area of the country. Some searching in Google should help you determine costs in your area, and you could use sites like as a starting point.

Most mortgage lenders require an appraisal to be done on a property before finalizing a loan. This ensures that the property is worth at least what your mortgage provider is lending you. Buyers are typically responsible for the costs associated with an appraisal, which usually ranges between about $450 and $550. Remember – appraisal prices are subject to change, and may vary from region to region, or from lender to lender.

What About Moving Costs?

Even once you've closed on your new home, there may still be additional expenses. If you'll be hiring professional movers to assist with your relocation, you'll need to budget accordingly. The cost of moving services depends greatly on the distance of your move, the amount of furniture/boxes you need to move, and the specific date of your move.

The best way to plan for moving costs is to get a few quotes from reputable moving companies and compare them carefully. In general, however, you can expect to spend between $1,000 and $2,000 for professional movers. This may not include a gratuity for the crew, so be sure to factor in tips as well.

Even if you don't plan on hiring professional movers, you may still need to budget for some moving expenses such as:
  • renting a moving truck/van (about $130 for a local move)
  • supplies like boxes, packing tape, etc. ($100-$300)
  • any unpaid time you'll be taking off work to move (variable)

Furniture, Lawn Equipment, and Other Miscellaneous Items

If you'll need to purchase new furniture for your home after moving in, you'll want to budget for this as well. This is especially true if you'll be moving into a larger home where you need to furnish additional rooms. If this is your first home, you may also need to purchase lawn care equipment like a lawn mower, weed eater, leaf blower, and the like.

Make Sure You Have an Emergency Fund

With all these expenses in mind, you can expect to tap into your savings account when you buy your first home. Still, it is important to keep in mind that unexpected events can occur at any time, so plan to keep an emergency reserve set aside at all times. Ideally, this fund should cover at 6-12 months' worth of your basic expenses (mortgage payments, utilities, groceries, etc.) if the need arises. General home maintenance will now be an expense as well, so be sure to revise your budget to include things like snow removal, general renovations, or appliance repairs.

The Bottom Line on Saving for a Home

There are a lot of costs to plan for when buying your first home, but with a little preparation and research, you can avoid unexpected surprises. From there, you can stress less about finances and focus on getting settled in to enjoy your new home!

Looking for more guidance as you navigate the home-buying process? Hudson Valley Credit Union is here to help! Reach out to our team today for information on our mortgage offerings and more