How Much Money Do You Need to Buy Your First Home?

Many first-time buyers delay purchasing a home because they believe they need a 20% down payment. While a larger down payment can be helpful, it is not always required.

The amount of money you need depends on the price of the home, the loan program you qualify for, your closing costs, and your financial situation.

You May Not Need 20% Down

Some mortgage programs allow qualified buyers to purchase a home with a smaller down payment. Depending on the loan and your eligibility, down-payment requirements may be much lower than 20%.

A mortgage lender can review your income, credit, debt, and savings to help determine which options may be available to you.

Costs to Prepare For

Your down payment is only one part of the home-buying budget. You may also need money for:

• Closing costs

• A home inspection

• An appraisal

• Earnest money

• Homeowners insurance

• Moving expenses

• Initial repairs or improvements

Closing costs can include lender fees, title fees, escrow charges, taxes, and other transaction expenses.

What Is Earnest Money?

Earnest money is a deposit submitted with your offer to show the seller that you are serious about purchasing the home.

The amount varies depending on the property, local market, and terms of the offer. In many cases, the earnest money is credited toward your closing costs or down payment at closing.

Your real estate agent can explain how the deposit works and help you understand the protections included in your offer.

Assistance Programs May Be Available

Some first-time buyers may qualify for down-payment or closing-cost assistance programs. Eligibility may depend on income, location, loan type, credit, or completion of a homebuyer education course.

These programs can change, so it is important to speak with a knowledgeable lender about current options.

Build a Comfortable Home-Buying Budget

The maximum amount a lender approves is not always the amount you should spend. Consider what monthly payment feels comfortable after accounting for your other expenses and financial goals.

Your estimated monthly housing payment may include:

• Principal and interest

• Property taxes

• Homeowners insurance

• Mortgage insurance

• Homeowners association fees

Leaving room in your budget can help you prepare for maintenance, repairs, and unexpected expenses after you move in.

Start Before You Feel Completely Ready

You do not need perfect credit or a large amount of savings to begin asking questions. Speaking with a real estate agent and lender early can help you understand where you stand and what steps to take next.

Even if you are several months away from buying, creating a plan now can make the process easier when you are ready.

Find Out What You May Qualify For

Every buyer’s financial situation is different. The best way to understand how much money you may need is to review your goals with trusted real estate and lending professionals.

I would be happy to help you create a personalized home-buying plan and connect you with a lender who can explain your financing options.

Yazmin Mendoza
Real Estate Agent
Olympia, Washington
Phone: 206-473-0006
Email: mendoza.homes94@gmail.com

Reach out today to take the first step toward owning your first home.