Know Your Upfront Costs Before Making an Offer
Buying a home involves two major upfront costs: the down payment and closing costs. Together, they can represent 7–25% of the purchase price. On a $400,000 home with 20% down and 3% closing costs, you need $92,000 in cash before you even get the keys. This calculator shows the full picture so you can plan your savings target accurately before entering the market.
The down payment percentage directly affects your loan size and whether you owe private mortgage insurance (PMI). A 20% down payment eliminates PMI, which typically adds $100–$250 per month to a mid-size mortgage. If you're using an FHA loan (3.5% minimum down), VA loan (0% for eligible veterans), or a conventional loan under 20%, factor in the additional PMI cost when comparing loan scenarios. Closing costs of 2–5% are often overlooked in early planning — budget for them explicitly.
Frequently Asked Questions
Some lenders allow you to roll closing costs into the loan balance (increasing your loan amount), or offer a "no-closing-cost" mortgage with a slightly higher interest rate. Both options reduce upfront cash needs but increase long-term costs.
Closing costs include loan origination fees, appraisal, title search and insurance, prepaid property taxes and homeowner's insurance, recording fees, and attorney fees where required. Ask your lender for a Loan Estimate within 3 days of applying — it itemizes all expected closing costs.
Most financial advisors recommend keeping 1–3% of the home's value in liquid reserves after closing for maintenance and repairs. An emergency fund covering 3–6 months of housing costs (mortgage + insurance + taxes) is the standard target.