How Much Does It Cost to Buy a House? Full Breakdown Before You Jump In

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So, how much does it cost to buy a house? That’s an awesome question to ask if you’re keen on venturing into real estate. As much as it’s a great way to invest and secure your future, there are a whole lot of costs that you need to know about beforehand – so you don’t walk into it blindly.

I say this because I know a lot of people are surprised by the costs associated with getting into the game. As someone who’s done his fair share of investing in real estate, I think by now I’m quite familiar and well versed on the costs of buying a house, so I’ll share what I know with you FOR FREE!

The costs of buying a house are many, and if you forget to account for some of the costs it can spell trouble for you.

A tale of my “just jump in” friend

In fact, I had a friend who wanted to get into real estate but wouldn’t listen to advice. Bad move already. Of course, it was good for him to get into, but he needed to build up a bit more money. He looked at the costs of buying a house at the surface level and didn’t think about much else.

He drummed up his downpayment then put an offer to buy the house, but he didn’t have any cash to cover anything else! All the fees added up and he was sweating. In the end, he begged for a $20K loan from his parents and life moved on.

But it could have ended poorly. For him, the “how much does it cost to buy a house” question didn’t even come up (or he just didn’t care for THE REAL answer because he knew he’d get a parental bailout.)

So, if you’re not like him and don’t have really generous family or friends, then listen up. The costs of buying a house can be high, it’s not just the downpayment – because a lot of people think that’s all buying a house entails, right? They couldn’t be more wrong!

If you’re wondering how much does it cost to buy a house, keep reading. I’ve got all the answers you need below.

Read more about:  How to Get into Real Estate Investing – Expert’s 6 Step Plan

The Upfront Costs

Let’s get one thing straight. Depending on where you want to buy, the house could cost under $100K, or over a million. If you’re just starting out, I’d seriously recommend long-distance real estate investing, so that you’re not locked into buying a home at some insane big-city price. 


This is the one cost everyone thinks about. It’s the most well-known cost of buying a house, but don’t make the mistake of thinking that it’s the ONLY cost of buying a house.

Usually, it’s 20% to avoid extra fees, but it can be as low as 3% (or even 0% for VA loans for veterans). If your house isn’t expensive though, this might not be a big part of your total fees. In which case, that would be a big win for you!

Leif’s case study: At some point, I planned to buy a house with 10% down, but then when I got into it, they wanted to add on 12% of additional fees! In the end, I bought it in case 🙂


This is about 0% – 3% of the total value of your home. If you’ve got a smooth tongue or can talk your way out of trouble, you can negotiate and get your lender to give you a better interest rate.

Origination fees

The good news here is that this fee doesn’t always exist! It’s basically to pay the banker’s salary and is typically 1% of your home value.

The cost of origination fees is dependent on your chosen lender – so don’t be afraid to shop around and explore the market before you commit to anything. Based on the estimate that each lender you approach gives you, you’ll be able to compare the offers and choose the best deal for you.

Depending on who you’re dealing with, you may even be able to negotiate lower origination fees or have them waivered completely! Give it a shot and who knows, you might just get lucky!

Earnest fees

You can think of this as a safeguard payment – for the seller that is. Earnest fees can be between 1% – 3% of the sale price, and act as protection for the seller in case you, as the buyer, back out and change your mind in the process.

The money isn’t paid directly to the seller, which should put you at ease; it’s typically kept in an Escrow account and paid if/when needed. If not, it could form part of your downpayment.

Some people call it a Good Faith Deposit, which makes sense when you consider its purpose.

Surveys, title insurance, and title transfer

Yes, more unexpected costs for the novice homeowner.

Insurance policies typically require these to accurately cover your property. Land surveys, for example, will be able to paint a better picture of where and how the property was built. If it meets building standards and regulations so it can be rectified where possible.

Homeownership isn’t a game, as much as it can be quite lucrative because of property appreciation over time, don’t let that fool you. Simply buying a house doesn’t guarantee that it’ll be worthwhile.

Prepaid fees

Simply put, these are the costs of homeownership, which can be charged before you even move in. They typically include homeowners insurance premiums, mortgage interest and real estate taxes.

If the seller has just paid the property taxes for a year, then you need to pay them back. Property taxes are often around 4%, so this can be a pretty big surprise!

The little things that add up

Whether you’re buying a new rental property or a home for you and your family, there are little costs that pop up along the way that you may overlook. If you buy a house and are happy with absolutely every little bit of it, corner to corner, congratulations – you’ve probably just made history!

For everybody else who may be wondering how much does it cost to buy a home, allow me to break down the other costs for you:


No one moves into a house and does nothing. At the very least, you’ll need a fresh coat of paint. If you want to take it a step further, renovations and furniture will add up to thousands!

Redoing the interior of a house near me costs $100K to get a new floor, kitchen and bathrooms. If you’re looking at putting in new furniture and décor pieces, it could well be double that or more.

Although, the great news here is that the costs are entirely up to you. There’s no fixed cost for this, but even if you decide to do it gradually, those costs do add up. Brace yourself.  


Yet again, another cost that isn’t standard, so I can’t give you an exact figure for. Just know that it forms a key part of the answer to how much does it cost to buy a home. If you’re buying a home to live in, I’m quite certain that you’ll have to move into it at some point.

Factor in the distance as well between your old and your new home, as that’ll also have a major impact on how much you’ll pay for the moving vehicle. If it’s quite close by, like within the same estate, you may not even have to hire professional movers if you tackle it one load at a time.

If it’s in another state, then you’ll definitely need all hands on deck. Over and above the actually moving, don’t forget to factor in the moving boxes and everything else that comes into making sure your things get from A to B in good condition.

Again, you need to budget for this well, otherwise you might just find yourself carrying all of your things in 1,000 plastic bags or worse, simply throwing everything into your car as is!

That’s not a good look. Plan ahead and get your finances sorted in time.


When it comes to how much money do you need to buy a house, I’d say don’t forget to add insurance because life happens.

You’re probably quite familiar with this concept because of your car, and it works quite the same with property. To protect yourself against the unexpected, it’s wise to insure your home and its contents if you can.

This is another cost that’s largely dependent on the value of your property and everything else in it. On average, insurance can cost you about $1,700 a year. Of course, if you live in a high-risk area (not just crime and theft, but also natural hazards like floods) you’ll probably pay a bit more than those in relatively safer neighborhoods.

HOA fees

Ah yes, then there are homeowners association fees. Yes, on top of your mortgage payment. If you live in an estate, this is a cost you’ll be subjected to. These fees are mainly for the upkeep of the shared spaces such as gardens, clubhouses, etc.

Tip: if I were you, I’d watch out and stay away from buying a house in a complex that’s due for a major upgrade or renovations. Why? Because that means major fees for you too! You’ll find yourself with an additional bill to cover those improvements. Watch out so you don’t get caught by this one.

Ongoing fees

Then let’s move on to the fees that people really overlook when they buy a house, the ongoing ones. Many of the fees above involve an annual contribution, then toss in actually maintaining your house!

Think about unexpected costs and emergencies such as your geyser and plumbing. For some reason, those are two things that almost always need to be looked at. Especially if your home isn’t brand new – plus utilities, i.e. water and electricity! (Phew! These costs are really adding up, aren’t they?)

Then of course there are certain subscriptions that you’ll probably sign up for to make your stay in your home a bit more pleasant. For convenience, Wi-Fi is a major one.

While you may have an emergency fund for your own personal needs and expenses, I suggest having an emergency fund solely for your property emergencies. Just to be on the safe side.

Picture this: your geyser’s acting up, but you don’t quite have enough emergency funds stored away so you push it and try to see how long you can avoid it for. A week later, you wake up to water gushing down from your ceiling and 10 times more damage to your house.

The moral of the story is, be prepared and fix things the minute you see a fault, so you don’t end up with additional damage to your property.  


I’m a huge champion for investing in real estate, but that’s not to say that you should go ahead and pursue it even if you’re not ready. According to Harvard University research, in 2015, nearly 8 million American households were classified as house poor – meaning that they were using at least half of their income to pay for housing.

It’s safe to assume that the number’s increased since then.

But don’t let that scare you, if you ask the right questions and make the necessary plans well ahead of time, you can definitely make a success of it and enjoy your new house.

By now, you should have a fairly good understanding of the relevant costs and have a decent answer to, “How much money do you need to buy a house?”

TL;DR – How much does it cost to buy a house? 

  • How much does it cost to buy a house? Well, the short and sweet answer is, a bit more than you probably initially thought, right?
  • A lot of people tend to only think of the downpayment as the main cost of buying a house – huge mistake!
  • Understand all the costs and prepare for them so you don’t end up like my friend who was caught napping.
  • Over and above the downpayment, consider the transfer fees, insurance, home improvement fees, earnest fees, etc.
  • Is it worthwhile to get into real estate, even with all these costs? In the long run, it could be. Just be sure to do the number crunching right, okay?

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