Home Buying Guides

Make sure you budget for these costs before starting your home search


Jim Geymont on 21 Jun 2019

Preparing to shop for a new home involves considerable financial preparation, some of which may come as a surprise if you’re a first-time homebuyer. Meeting with a mortgage lender before embarking on your new home search is a must so you know how much house you can afford. Your lender will also go over estimated closing costs.

But in addition to closing costs, there are a number of other expenses, some of which you will need to budget for prior to closing and some that will kick in once you’ve been given the house keys. Here are some of the most common costs new homeowners should include in their home-buying budgets:

Home inspection

As one of the costs you will need to shoulder prior to closing, the home inspection will let you and your lender know that the house you are buying is in proper working condition. The cost of inspection will vary, depending on the size of the property, scope of the inspection requested and the going rate in your market. Your agent can give recommendations for an inspector and schedule the appointment, but plan to be present for the inspection if at all possible. Ask what is included in the inspection and as well as the rate, as these can vary from inspector to inspector.

Homeowners insurance

Your mortgage lender will likely insist you provide proof of homeowner’s insurance as part of the loan approval process. You may be asked to pay one or more monthly premiums upfront, so budget accordingly. In addition to basic homeowners’ coverage, you may need flood insurance, fire insurance or other insurance products. Shop around for the best rates and get recommendations as to what coverage you should get.

Property taxes

Property taxes vary by location. Your agent can provide you with information on the tax rate your new home falls under as well as provide you with information on past property tax bills. Typically, urban areas have higher property taxes than rural sites. The amount of property tax you will pay on a property will be based on the assessed value.


If you have been living in an apartment, you may not have taken into consideration the higher utility costs you will pay once you become a homeowner. There are a number of factors that help to determine the cost of utilities for a property, including its size, your habits and the number of people living in the house. Your agent may be able to get information from the seller’s agent regarding the average electric, gas and water bills for the home.

Furniture and decor

This is one of those expenses you won’t need to worry about immediately, unless you currently have no furniture at all. Otherwise, you could choose to add furniture and decorate as you go along, although chances are you will want to do as much as financially possible when first moving in. Unless you are downsizing, chances are your new home will provide you with additional square footage. That increased living space means you will need additional furniture. You may not have had a guest room or a formal dining room in the past, for example. You can also expect to spend some money on decor as you pull together a new look for your new home.

Repairs and updates

While the home inspection may have presented the opportunity to ask the seller to make any major repairs, there are likely still some smaller projects on your list, whether minor repairs or updates. Just as with furniture and decor, it’s possible that some of these tasks can wait and be addressed months or even years after you’ve moved in. However, it’s a good idea to plan on keeping a cushion in your savings account to use for unexpected home maintenance and repairs.