How to Budget to Buy a New House

Borrowing and Credit, Home Ownership, Savings

Buying a home is probably one of the most significant investments you’ll ever make. It’s important to remember that what you can buy doesn’t always equate to what you may have available in your budget plans. Determining how much house you can afford involves a lot more than just the down payment. That’s why we’ve gathered what really goes into buying a house to help you prepare to make your house a home.

Costs of Buying a House

When it comes to the costs associated with buying a house, the down payment is where a sizable chunk of your money will go, but ongoing expenses like the mortgage payment, property taxes and homeowners insurance will also add up quickly.

So, how much should you budget when buying a house? It will ultimately depend on your location and house price, but there are ways you can estimate the total price tag.

Upfront Costs

Down Payment

While putting 20% of the selling price down is ideal, new home buyers most likely don’t have that pile of cash available. Luckily, there are home buyer programs that require less down payment. Check out the Centris Down Payment Calculator to estimate how much you’d need to put down.

Closing Costs

Closing is when the property title gets officially transferred to you. While home buying closing costs can vary depending on where you live and your loan type, they’re typically 2-5% of the house purchase price.

Inspection Costs

In today’s home buying economy, inspections may be left off the negotiating table, but it is something to strongly consider. Inspections can give you a legal way to back out of the purchase if any substantial problems are discovered. Plus, if minor issues arise, you can likely negotiate with the seller to do some work or bring the purchase price down. Inspection costs will vary depending on the house size, location and what you’d like inspected. According to the U.S. Department of Housing and Urban Development, inspection costs are typically around $300-$500.

Ongoing Costs

Mortgage

Once you get your dream home, you’ll have to start paying back your mortgage. Your mortgage payments will vary depending on the price of your home and your type of mortgage. You can use our Mortgage Calculator to help estimate how much your payments will be. Our Mortgage Loan Originators can also help find a mortgage type that works best for you.

Property Taxes

Property taxes are usually calculated as a percentage of your home’s assessed value. These will vary depending on the location of your home. For example, in Nebraska, the Omaha area has an average property tax rate of 2.6%. This rate will vary between counties.

Homeowners Insurance

Homeowners insurance covers losses and damages to your residence and some assets inside the home and is mandatory by mortgage lenders. Homeowners insurance will vary greatly depending on house size, how much coverage you need and location. According to Nerdwallet’s 2022 analysis, the average cost of homeowners insurance in the U.S. is about $1,784 per year.

Home Maintenance

At some point, your new home will need maintenance, whether that be regular maintenance like yard work or more extensive projects like a new roof. You’ll need to account for such expenses when figuring out what you can afford. According to Home Light, the average annual home maintenance costs can range from $950 to $9,820.

Budgeting Tips for Buying a Home

Determine How Much House You Can Afford

Using our Mortgage Calculator is a great rough estimate tool for your first time home buyer budget. Once you’re ready to dive deeper into what financing a home looks like, our Mortgage Loan Originators are here to help!

Start Saving for a Down Payment

While putting down 20% might not be in your home buying budget, the more you save and put down, the better.

Remember Day-to-Day Needs

Make sure you budget for the items you will need to care for a home such as a lawn mower, snow blower, garden hose, sprinkler system, etc. These can add up quickly so it’s good to set aside a budget for these needs.

Save Money for Emergencies

Accidents and natural disasters happen. Having extra money tucked away could mean all the difference in getting your home back in tip-top shape.

As you prepare for this exciting time in your life, it is very important to have a mortgage lender you can trust with your financials and who will steer you on the right path. Let Centris Federal Credit Union be your trusted local mortgage experts. Visit our website to get in contact with a mortgage expert today!

<a href="https://www.centrisfcu.org/blog/author/megan-steiner/" target="_self">Megan Steiner</a>

Megan Steiner

Author

Megan Steiner is a marketing specialist at Centris Federal Credit Union in Omaha, Neb. She specializes in social media strategy, content creation and writing. Megan received her Bachelor of Business Administration in marketing and Bachelor of Foreign Language and Literature in German from the University of Nebraska at Omaha. In her free time, Megan loves to learn languages and research sustainable clothing content for her personal blog.

Guest Contributors

Brian Beard

Brian Beard is the assistant vice president, mortgage production for Centris Federal Credit Union in Omaha, Neb. Brian has been in the mortgage industry for 32 years and leads the team of seven Centris mortgage loan originators. He is involved in the Women’s Council of Realtors, Omaha Area Board of Realtors and the Nebraska Mortgage Association. Brian received his bachelor’s degree in business management from the University of Nebraska-Lincoln and still enjoys keeping up with the various Nebraska Cornhusker sports teams. In his free time, Brian also enjoys golfing and hiking.

Heidi Weeks

Heidi Weeks is vice president, real estate at Centris Federal Credit Union in Omaha, Neb. She directs and oversees the activities of the real estate lending division, including first mortgage and construction lending, and is an active member of the Nebraska Mortgage Association. Heidi received her bachelor’s degree in education and human sciences from the University of Nebraska-Lincoln. In her free time, Heidi enjoys traveling and spending time with her family, which includes her bernadoodle named Maui.

You May Also Like