What Costs Do People Forget When Buying a Home?

Most buyers budget carefully for the down payment and mortgage but underestimate the full cost of homeownership. Here is every expense category to plan for.

Closing costs

Buyer closing costs typically range from 2–5% of the home price and are due at the closing table, separate from and in addition to your down payment. On a $400,000 home, that is $8,000–$20,000 in cash you need available on closing day.

The major line items include the loan origination fee (typically 0.5–1% of the loan), appraisal fee ($400–$700), lender's title insurance, owner's title insurance, escrow and settlement fees, recording fees, prepaid interest, and prepaid insurance and property tax escrow. Use the Closing Costs Calculator to estimate your specific total. If your down payment is below 20%, also budget for PMI, typically $100–$300/month until your loan-to-value ratio reaches 80%.

Moving and setup costs

Buyers moving from an apartment to a house often underestimate how much it costs to furnish and equip a larger space. Moving costs for a local move average $1,000–$2,500. Long-distance moves can run $4,000–$10,000 or more.

Setup costs, including new furniture, window treatments, landscaping, garage door openers, and additional appliances, can easily total $5,000–$20,000 in the first year.

Maintenance and repairs

This is the most consistently underestimated cost category. The standard 1% rule suggests budgeting 1% of the home's value annually for maintenance. On a $400,000 home, that is $4,000 per year or $333 per month on average.

Maintenance costs are lumpy: small expenses most years, then a major expense like a roof replacement ($8,000–$15,000), HVAC system ($5,000–$10,000), or water heater ($800–$2,000) every several years. The 1% rule is a long-run average, not a monthly guarantee. Having a home maintenance reserve is essential. Use the Home Affordability Calculator to see how maintenance, taxes, and insurance stack up against your income before you commit.

Property tax surprises

Property taxes vary enormously by location, from under 0.5% in some Southern states to over 2% in Illinois, New Jersey, and New Hampshire. What buyers often miss is that property taxes can increase after a sale.

Many jurisdictions reassess property values when a home sells, often at the sale price. If the previous owner had a much lower assessed value (common in states with reassessment caps like California or New York), your tax bill can jump significantly after you purchase.

Utility cost increases

A larger home with more square footage, higher ceilings, older insulation, and a bigger yard typically costs more to heat, cool, and maintain than an apartment. Utilities including electricity, gas, water, and trash can add $200–$500/month more than apartment dwellers pay.

Ask the seller for 12 months of utility bills before closing. This is a reasonable request that most sellers will accommodate and can significantly affect your budget.

HOA fees and special assessments

Condominiums, townhouses, and many single-family home communities have HOAs with monthly fees ranging from $100 to over $1,000 depending on amenities and building condition. These fees are not optional and increase over time.

More dangerous than regular HOA fees are special assessments, one-time charges for major repairs that the HOA's reserve fund cannot cover. Before buying in an HOA, request the reserve fund study, meeting minutes, and financial statements. A poorly funded HOA is a serious financial liability.

Insurance surprises

Homeowners insurance premiums have risen sharply in many markets due to climate-related risks. In some coastal and wildfire-prone areas, insurance has become unavailable from standard carriers or costs several times the national average. Always get insurance quotes before closing, not after.

You may also need flood insurance (required by lenders in FEMA flood zones, not included in standard homeowners policies), earthquake insurance in seismic areas, or extended coverage for expensive personal property.

The cost of selling

Many buyers plan carefully for buying costs but forget that selling a home is also expensive. Seller costs typically include agent commissions (5–6% of sale price), transfer taxes, title fees, and often repairs and staging costs. On a $450,000 eventual sale price, selling costs could total $27,000–$36,000.

These selling costs are part of the true total cost of homeownership and must be factored into your rent vs buy comparison, which is exactly what our Rent vs Buy Calculator does.

Estimate Your Closing Costs

Get a full line-item estimate of buyer and seller closing costs.

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Frequently Asked Questions

The standard estimate is 1–2% of the home's value per year. On a $400,000 home, that is $4,000–$8,000 annually or $333–$667 per month. Older homes, homes in harsh climates, and homes with larger lots or pools require budgeting toward the higher end. This covers routine maintenance, appliance replacements, and unexpected repairs.

Some costs are fixed (government recording fees, transfer taxes) but many are negotiable or can be offset. You can shop for your own title company in most states, negotiate the origination fee with your lender, and ask the seller to contribute to closing costs. Lender credits can also offset costs in exchange for a slightly higher interest rate.

A special assessment is a one-time charge by your HOA for a major repair or improvement that the HOA's reserve fund cannot cover, such as a new roof on the building, parking lot repaving, or pool renovation. Special assessments can range from a few hundred to tens of thousands of dollars and are required regardless of whether you agree with the decision.

By Barron Hansen, Founder · Last reviewed May 3, 2026