Wondering What it Actually Costs to Buy a Home? Let's Break it Down!

When you're ready to make the step toward homeownership, it can be hard to know exactly how much you'll end up spending. Not only is the list price of a home just one factor, but there are also closing costs, property taxes, insurance, and other fees that can add up. To help give you a better idea, we've created four fictional scenarios to illustrate potential costs at different price points. Whether you're a first-time homebuyer or just curious, read on to get a better idea of what to expect.

Scott | The Starter:

Scott is a first-time homebuyer looking to purchase a modest home priced at $250,000. He puts down 5% and opts for a 30-year mortgage at a 6.5% interest rate. This leaves him with a monthly payment of $1,801. However, this is just the beginning. When you factor in property taxes, insurance, and potential HOA fees, his total monthly expenses end up being around $2,553.

Ashley & Mike | The Savy

Ashley and Mike want to househack their way into their first property. They are looking for 3-unit house for around $500,000. They opt to put 3.5% down for an FHA 30 year loan. Their interest rate is around 6.5% and their monthly payment would be around $3,909 including all taxes and insurance. If they rent out 2 out of the 3 units for total of $3,200 per month they only are responsible for $709 per month. 

Emily & Matt | The Upgraders:

Emily and Matt are ready for something a bit larger, so they opt for a $700,000 home with a 10% down payment and 30-year mortgage at a 6.5% interest rate. This means their monthly payment is $3,982. But, as you might guess, this isn't the end of their expenses. When you add property taxes, insurance, and potential HOA fees, their total monthly expense jumps up to $4,952. 

Hilary | The Idealist:

Finally, we have Hilary. She's looking for her dream home regardless of the price tag. She decides on a stunning home priced at $1 million with a 20% down payment and 30-year mortgage at a 6.5% interest rate. Her monthly payment is now $5,056. But, once again, with property taxes, insurance, and possible HOA fees factored in, her monthly expenses end up being closer to $6,098. 

Each of these fictional scenarios represents a different price point, but they all teach us the same lesson: the cost of a home extends far beyond the list price. From closing costs to monthly fees, being a homeowner requires a serious commitment to your finances.

If you're thinking about buying a home, it's important to do your research and budget accordingly. Use my FREE Budget Template to start budgeting today! While these fictional scenarios give you a rough idea of what you might pay at different price points, a trusted mortgage advisor can give you more accurate information for your specific situation. Don't hesitate to reach out to connect with a mortgage lender who can help you navigate the complexities of homeownership. After all, owning a home can be a dream come true, but it needs to make financial sense too.