Thinking about buying a house in the near-to-distant future? You've probably read a few articles about the cost by now — and walked away with more questions than answers. A vague "2–5% for closing costs" range is not helpful when you're staring at your savings account trying to figure out if you can actually do this.
For a home at the current national median of $398,000, the total cash you'll need in your bank account ranges from roughly $22,000 to $60,000 depending on your loan type — and that's before reserves. Daniel Cabrera, owner of Sell My House Fast SA TX, has seen this gap blindside buyers firsthand. A first-time buyer budgeting 3% in closing costs on a $280,000 home expects an $8,400 bill — but the actual Closing Disclosure often lands around $12,000 once prepaid property taxes and insurance escrow are added.
We'll give you specific dollar amounts for a ~$400K home, break costs down by loan type (FHA, conventional, VA), cover the buyer agent commission rules that changed in 2024, and walk through the first-year costs of homeownership. The median existing-home price sits at $398,000 as of early 2026, with 30-year mortgage rates around 6.37%.[1] [2]
How much does it cost to buy a house in 2026?
The short answer depends on your loan type. For a home at the national median of $398,000, here's the range of total upfront cash you'll need:
- FHA loan (3.5% down): ~$22,000–$34,000
- Conventional loan (10% down): ~$50,000–$60,000
- VA loan (0% down): ~$10,000–$18,000
Those figures include your down payment, closing costs, and prepaid escrow deposits — but not post-closing reserves, which we'll cover later.
Here's a summary of what you can expect to pay out of pocket:
| Expense | Estimated amount |
|---|---|
| Down payment | $0–79,600 (0–20% of purchase price) |
| Closing costs | $4,661 avg (1–3% of purchase price) |
| Buyer agent commission | ~2.82% avg (~$11,224 — may be seller-paid) |
| Earnest money | $3,980–7,960 (1–2%, applied to purchase) |
| Inspection | $296–424 |
| Appraisal | $314–424 |
| Moving | $1,489–3,129 |
| Furnishings | Varies |
Assumptions: $398,000 purchase price. Sources: NAR (Feb 2026), Lodestar, Clever Real Estate, Wells Fargo, Angi, This Old House.[1] [3] [4] [5] [6] [7] [8]
Cash buyers skip loan-associated fees, but they still pay closing costs — typically 1–3% of the home price — plus taxes, title, and insurance.
Let’s break down each cost in detail, discuss your ongoing monthly expenses, and explore a readiness framework so you can figure out whether you're closer to buying than you think … or whether you need a few more months of planning.
Upfront costs to buy a house
Down payment
Let's get the biggest myth out of the way: you do not need 20% down to buy a house. That 20% number is the threshold where private mortgage insurance (PMI) goes away; it's not a minimum. Most first-time buyers put down far less.
Your actual down payment depends on your loan type. FHA loans require as little as 3.5% down: that's $13,930 on a $398,000 home.[9] Conventional loan buyers typically put down 10–25%, according to NAR data.[10] And VA loans — available to eligible veterans and active-duty service members — allow 0% down.[11]
Here's how down payments look at different price points:
| House price | 3.5% down | 10% down | 20% down |
|---|---|---|---|
| $200,000 | $7,000 | $20,000 | $40,000 |
| $300,000 | $10,500 | $30,000 | $60,000 |
| $398,000 | $13,930 | $39,800 | $79,600 |
| $500,000 | $17,500 | $50,000 | $100,000 |
Now, about PMI. If you put less than 20% down on a conventional loan, you'll pay private mortgage insurance until you reach 20% equity. PMI runs 0.46–1.5% of the loan amount annually.[12] On a ~$380,000 loan (5% down on a $398K home), that works out to roughly $146–$475 per month.
That's a real cost. But here's the math most people miss: Pavel Khaykin, a real estate consultant in Tampa, Florida, explains that PMI at $100–$200 per month is often cheaper than waiting three years to save 20% — especially when home prices could rise $50,000 or more in that time. His advice: if the monthly cost of PMI is less than the projected monthly home price appreciation in your market, buying now with 5–10% down is the smarter financial move.
Cabrera puts it even more concretely. A buyer with 5% down on a $280,000 property, saving $1,000 per month, would need about 3.5 years to reach 20%. With 3–4% annual appreciation, that home's price grows by $30,000 or more — making the total PMI cost of $4,000–$8,000 far cheaper than the alternative of waiting and paying rent.
The bottom line: don't let PMI scare you out of buying if you're otherwise financially ready.
Earnest money
Earnest money is a deposit you put down to show the seller you're serious about the purchase. It typically falls between 1% and 2% of the home's purchase price, so $3,980 to $7,960 on a $398,000 home.[5]
The money goes into an escrow account and is usually applied toward your closing costs or down payment at closing. If the deal falls through for a reason covered in your sales contract — like a failed inspection or financing contingency — you'll get it back. If you back out for a reason that isn't protected, you may forfeit the deposit.
Closing costs
Closing costs are the fees you pay to finalize the sale. The average home buyer pays about $4,661 in closing costs, which comes out to roughly 1–3% of the purchase price.
Here's a breakdown of common line items:
| Closing cost | What it covers |
|---|---|
| Closing/escrow fees | Paid to the escrow company |
| Recording fees | Government fee to update local records |
| Title service fees | Search and verification of the property's title |
| Title insurance | Protects the lender from future title claims |
| Origination fee | Lender's fee to process your loan |
| Discount points | Optional fee to reduce your mortgage interest rate |
| Property taxes (prorated) | Your share of taxes for the period you own the home |
| Transfer taxes | State/local tax on the title transfer (varies by location) |
The line item that shocks buyers most: Prepaid escrow deposits. You'll need to prepay roughly a year of homeowners insurance and several months of property taxes upfront to fund your escrow account.
Khaykin notes that online calculators treat closing costs as a fixed 2–3%, but actual costs vary significantly based on the exact day of the month you close, local tax rates, and insurance premiums. One way to reduce prepaid interest: close later in the month, so you're covering fewer days of per-diem interest at the closing table.
Buyer agent commission: What changed in 2024
Since August 17, 2024, the NAR settlement has changed how buyer agent commissions work. Before the settlement, the seller typically offered a commission to the buyer's agent through the MLS, and buyers rarely thought about it. Now, buyers sign a written buyer representation agreement before touring homes, and buyer agent compensation is no longer listed on the MLS or automatically offered by the seller.[1]
That said, commissions haven't collapsed. Clever Real Estate's research from March 2026 shows buyer agent fees have rebounded to approximately 2.82% nationally, with total commissions averaging 5.70%.[4] About two-thirds of agents report no significant commission shift since the settlement took effect.
In many transactions, the seller still agrees to cover the buyer agent's fee as part of the deal. But it's now an explicit negotiation point, not a given.
Kristy Nakamura, a broker with Ka Home Group and eXp Realty on Oahu, says she walks buyers through the buyer-broker agreement upfront and shows them exactly what services they're getting.
In complex markets like Hawaii, most of her buyers haven't pushed back on commission because they want experienced representation. But in more straightforward markets, buyers are successfully negotiating rates down to 1.5–2.5%, especially when they've done their own research on comparable properties ahead of time.
The key takeaway: buyer agent fees are negotiable. You can also work with a discount brokerage to reduce this cost: Clever Real Estate connects buyers with experienced local agents who can help you save.
Inspection
During a home inspection, a qualified professional examines the property for major structural or foundational issues. Inspections are typically required by lenders — especially for FHA and other government-backed loans — and cost between $296 and $424.[6]
You may be able to negotiate a contract clause that lets you back out or request a lower price if the inspection turns up serious problems. You can also ask the seller to make repairs before closing.
Appraisal
An appraiser assesses the property's fair market value by comparing it to similar recently sold homes. Expect to pay $314 to $424, though costs may run higher in some markets.[7]
Your lender requires the appraisal to confirm the home is worth what you're paying; it protects both you and the bank.
Moving
The average cost of a local move is $1,489, and long-distance moves average $3,129 — though your total will depend on the size of your household and distance.[8]
If there's a gap between selling your current home and moving into the new one, budget for short-term storage costs as well.
Furnishings
Furniture is easy to overlook when you're focused on closing costs and down payments, but it adds up — especially if you're moving from a smaller space. You can spend a few hundred dollars at thrift stores or several thousand furnishing a full house.
There's no standard number here, but it's worth including in your overall budget.
What you'll pay each month as a homeowner
Buying a house is just the first expense. Once it's yours, you'll have recurring monthly costs that go well beyond the mortgage payment.
| Expense | What it covers | Monthly cost (est.) |
|---|---|---|
| Mortgage principal and interest | Paying off your home loan | ~$2,370 (assuming $398K home, 5% down, 6.65% rate, 30-yr fixed) |
| Property taxes | County/local taxes based on assessed value | ~$260–$290 |
| Homeowners insurance | Covers damage, theft, liability | ~$200–$215 |
| PMI/mortgage insurance | Required if less than 20% down (conventional) | ~$146–$475 |
| Maintenance | Repairs, upkeep, and system replacements | ~$330–$1,330 |
| Utilities | Electric, gas, water, trash, internet | ~$430 |
| HOA fees | If applicable | $100–$400 |
Sources: Freddie Mac PMMS (April 2026), Census/WalletHub, reAlpha, NerdWallet, Urban Institute via NerdWallet, Hometap/Stacker, Ally (May 2025).[2] [13] [14] [15] [16] [17] [18]
A few things to note. Property taxes average roughly $3,119–$3,500 per year nationally, but effective rates range from 0.27% in Hawaii to 2.23% in New Jersey — so your actual bill depends heavily on where you live.[13]
Homeowners insurance averages about $2,490 per year for a $400,000 dwelling — roughly $208 per month.
For maintenance, the standard rule is 1–4% of your home's value per year. On a $400,000 home, that's $4,000–$16,000 annually — or $330–$1,330 per month. The wide range reflects the difference between a newer home that needs minimal upkeep and an older property with aging systems.
And if you put less than 20% down, PMI will be part of your monthly payment until you reach 20% equity. On a conventional loan, that runs $146–$475 per month depending on your loan-to-value ratio and credit score. FHA loans carry their own mortgage insurance premium (MIP) of 0.15–0.75% annually, and unlike conventional PMI, FHA MIP often sticks around for the life of the loan.
First-year costs after closing
You got the keys. Now what?
This is the chapter of homeownership that most buying guides skip — and it's the one that catches new owners off guard. On Reddit's r/FirstTimeHomeBuyer, the highest-engagement thread we analyzed (682 upvotes, 97 comments) wasn't about down payments or closing costs. It was buyers sharing what they spent in the first few months after moving in. The range: $7,000–$20,000.
Here's where that money typically goes:
- Immediate needs: Rekeying locks, professional cleaning, painting, and minor repairs the inspection didn't flag — a slowly leaking faucet, a dishwasher that quits in month two, or an HVAC system that was running fine during the walkthrough but fails after six months.
- Furniture and appliances: Even if you're not furnishing from scratch, budget at least $2,000–$5,000 for the basics — a washer/dryer, a couch, window treatments, or a bed for the guest room you didn't have before.
- Tools and yard equipment: Lawnmower, basic toolkit, garden hose, snow blower if you're in a cold climate. These small purchases add up fast.
- Utility deposits and setup fees: Transferring or establishing service for electric, gas, water, trash, and internet often comes with deposits and activation fees.
Andrew Reichek, founder of Bode Builders and a licensed buyer's agent, puts first-year maintenance and repair costs at $4,000–$8,000 on average — including $400 for HVAC service, $1,500 for plumbing surprises, and $2,000 for landscaping. He also flags utility spikes of $250 or more per month compared to apartment living, and cites the 1% rule: budget at least 1% of your home's value ($4,000 on a $400K home) annually for maintenance.
There's also a cost that no spreadsheet captures. Beyond the financial cost, homeownership carries a steep mental bandwidth tax — the executive function required to identify problems, figure out solutions, and vet and pay someone to fix them.
Even for buyers who are flush with cash, the cognitive load is real, and it's one of the most overlooked costs of owning a home.
You don't need to buy everything at once. But you should know this spending is coming so you can plan for it.
Cost breakdown by buyer profile
Not every buyer's costs look the same. An FHA borrower's cash-to-close is dramatically different from a conventional buyer putting 20% down, and a VA buyer's picture is different from both. Here's how the numbers shake out for a $398,000 home:
| Cost category | FHA (3.5% down) | Conventional (10% down) | Conventional (20% down) | VA (0% down) |
|---|---|---|---|---|
| Down payment | $13,930 | $39,800 | $79,600 | $0 |
| Closing costs (est.) | $7,960–$11,940 | $7,960–$11,940 | $7,960–$11,940 | $7,960–$11,940 |
| VA funding fee | N/A | N/A | N/A | ~$9,154 (2.3% first use) |
| PMI/MIP (monthly) | ~$170–$200 (MIP) | ~$146–$475 | $0 | $0 |
| Est. monthly payment (P&I + tax + ins + PMI) | ~$2,930–$3,080 | ~$2,680–$2,980 | ~$2,230–$2,380 | ~$2,730–$2,880 |
| Total cash needed at closing | ~$22,000–$26,000 | ~$48,000–$52,000 | ~$88,000–$92,000 | ~$17,000–$21,000 |
Assumptions: $398,000 purchase price, 6.65% 30-year fixed rate, ~0.87% property tax rate, ~$208/mo insurance. VA funding fee assumes first-time use with $0 down. Closing costs estimated at 2–3%. Figures are approximate.
A few things stand out. The FHA path gets you in the door with the least cash, but you'll carry mortgage insurance for most (often all) of the loan's life. Conventional at 20% down has the lowest monthly payment but requires nearly $90,000 upfront, which is out of reach for most first-time buyers.
VA loans deserve special attention. Nakamura, who works extensively with military families, notes that first-time VA buyers often assume $0 down means $0 at closing. It doesn't. Closing costs in most markets run 2–4% of the purchase price, and the VA funding fee (2.3% for first-time use with no down payment) adds another ~$9,000. That said, VA buyers skip PMI entirely, which saves significant money over time.
If you're not sure which path fits your situation, Clever Real Estate can connect you with an experienced local agent who can walk you through the options.
Are you financially ready to buy?
Knowing the costs is one thing. Knowing whether you can actually afford them is another. Here's a quick framework to help you self-assess.
The 28/36 rule. This is the standard lenders use, and it's a useful gut check even before you apply. Your total housing costs (mortgage, taxes, insurance, PMI, HOA) should stay at or below 28% of your gross monthly income. Your total debt payments — housing plus student loans, car payments, credit cards — should stay at or below 36%. On a $398,000 home with a ~$2,700/month total housing cost, you'd want a household income of at least ~$115,000 to stay within that 28% threshold.
Post-closing reserves. This is the piece most buyers skip and the mistake that creates the most financial stress. Reichek recommends keeping 3–6 months of total PITI (principal, interest, taxes, and insurance) plus basic living expenses in liquid savings after closing. For a buyer with a $2,200/month payment, that means $20,000–$45,000 in cash that you don't touch for closing.
Khaykin frames it differently but reaches the same conclusion: put 10% down, keep 10% in liquid savings, and pay the small monthly PMI rather than draining your accounts to hit 20% down. The monthly cost of PMI is almost always less painful than having zero liquidity when the AC dies in August.
The "house poor" warning. Multiple experts we spoke with flagged the same mistake: buyers stretch every dollar to maximize their down payment and arrive at closing with an empty bank account. As Cabrera puts it, reserves after purchasing are more important than avoiding PMI. A buyer who puts 15% down and keeps 15% in savings is in a far better position 60 days post-closing than one who put 20% down and has nothing left.
If the numbers above feel tight, that's OK. It might mean you need a few more months of saving, not that homeownership is out of reach. And if they feel comfortable, you may be closer than you think. Use a home affordability calculator to run your own numbers.
How to reduce the cost of buying a house
The total cost of buying is significant — but there are real, specific ways to bring it down.
Shop lenders aggressively. This is the single highest-leverage move you can make. Getting quotes from three to four lenders can yield thousands of dollars in savings over the life of your loan through lower rates, reduced origination fees, or better terms. Don't just go with the first lender who pre-approves you.
Look into first-time homebuyer programs. State and local down payment assistance programs and closing cost grants are widely available but underused. Many buyers don't know they exist or assume they won't qualify. Check your state's housing finance agency — you might be surprised. Clever's first-time homebuyer resources can help you get started.
Negotiate seller concessions. Sellers can agree to cover some or all of your closing costs as part of the deal. This is especially common in buyer-friendly markets or when a home has been sitting for a while. Your agent can advise you on what's reasonable to ask for in your local market.
Consider your buyer agent fee. Post-settlement, this is a negotiable cost. Some buyers have successfully negotiated rates to 1.5–2.5% by doing their own research on comparable properties ahead of time. You can also work with a discount brokerage. Clever Real Estate matches you with experienced local agents, and you could qualify for a cash rebate at closing.
Think creatively about your down payment. Austin Glanzer, owner of 717homebuyers.com, bought a duplex with less than 20% down, lived in one unit, and rented the other, with the rental income helping offset his PMI. And if you're a veteran or active-duty service member, VA loans offer 0% down with no PMI at all. Nakamura calls this one of the biggest advantages she explains to her military clients.
Close later in the month. A small but real savings: closing later in the month reduces the per-diem prepaid interest you owe at the closing table. It won't change the big picture, but every dollar counts.
Bundle your insurance. Bundling your homeowners and auto insurance with the same provider often qualifies you for a discount. It's a quick win that takes one phone call.
Cost of building a house vs. buying
Building a house gives you more customization, but it typically costs more than buying an existing home of equivalent size and style. Construction and labor costs have remained elevated, and construction loans usually require 20–30% down, significantly more than a standard purchase mortgage.
That said, a new build won't come with the deferred maintenance surprises that an existing home might. You won't need to budget for a roof replacement or aging HVAC in the first few years. For most buyers, buying an existing home is the more predictable and affordable path, but if customization matters to you and you have the budget, building is worth exploring.
Cost to buy a house calculator
Our calculator can help you estimate the total upfront costs for your specific situation. Plug in your purchase price, down payment percentage, and local cost estimates to get a personalized number.
The down payment is the single biggest variable in your upfront costs. Other expenses — like the appraisal, inspection, and moving — will vary based on your local market and the specifics of your transaction. Work with a Clever agent to get accurate local estimates and potentially get a cash rebate at closing.
Want to know how much you may be able to afford? Best Interest can get you pre-approved quickly.
FAQ
How much cash do I actually need in my bank account to buy a $400K house?
It depends on your loan type. With an FHA loan (3.5% down), expect to need roughly $22,000–$34,000 in total upfront cash: that's down payment plus closing costs plus prepaid escrow deposits. Conventional buyers putting 10% down may need $50,000–$60,000. VA buyers can get in for $10,000–$18,000 despite the $0 down payment, since closing costs and the funding fee still apply. Add 3–6 months of housing expenses in reserves on top of those numbers.
Do I have to pay my buyer's agent's commission now?
Since the August 2024 NAR settlement, buyer agent fees are no longer automatically offered by the seller through the MLS. You'll sign a written buyer representation agreement that spells out your agent's fee — typically around 2.82% nationally — before touring homes. In many transactions the seller still agrees to cover this cost, but it's now an explicit negotiation point. You can also negotiate the rate or work with a discount agent to reduce it.
Is it smarter to pay PMI now or wait until I've saved 20%?
In most markets, buying sooner with a smaller down payment is the better math. PMI on a typical purchase runs $100–$200/month. If home prices appreciate even 3% annually, waiting three years to avoid PMI could cost you $30,000+ in higher purchase price — far more than the $5,000–$7,000 you'd spend on PMI during that time. The exception: if you're very close to 20% and can get there within a few months.
What costs surprise new homeowners most in the first year?
The post-closing spending that articles rarely mention: rekeying locks, professional cleaning, basic yard equipment, window treatments, and the HVAC service or plumbing fix that pops up in month three. Real estate professionals estimate first-year maintenance and repair costs at $4,000–$8,000 for a $400K home. Utility costs also surprise former renters. Expect $250+/month more than apartment living, especially if you're now paying for water, trash, and lawn care.
How much emergency fund should I keep after closing on a house?
Financial advisors and lending professionals consistently recommend maintaining 3–6 months of total housing expenses — not just your mortgage payment, but property taxes, insurance, HOA fees, and utilities — in liquid reserves after closing. For a buyer with a $2,200/month total housing cost, that's roughly $6,600–$13,200 in emergency savings. The most common mistake: draining every dollar for the down payment and having nothing left for an unexpected repair or job disruption.