Instead, take into account the following fees and costs from the beginning. Remember that your lender, insurance agent, and real estate agent should be able to help you estimate these fees more precisely for your location and your purchase context.

What Are the Costs of Buying a Home?

One way to think about the costs of buying a home is to think about the cast of characters involved in the purchase: There’s the seller, but there’s also usually at least one appraiser, an inspector, a mortgage lender, a title insurance company representative, and possibly others. There are also ongoing costs for taxes, insurance, and maintenance. Here are some of the big costs to expect as you purchase your home.

Down Payment

The biggest mortgage cost you’ll pay upfront usually is your down payment. While certain loans don’t require a down payment, most loan types require at least 3% of the purchase price. Paying at least a 20% down payment allows you to cut another cost: private mortgage insurance (PMI).

Lenders also need to receive payment for the expertise, use of capital, and paperwork they do as part of the lending process. They may charge an application fee, origination fee, and a credit report fee, among other possible fees. Typically, the origination fee is the main mortgage lender fee and is usually 0.5 to 1% of the mortgage amount.

Appraisals and Surveys of Property

Lender-related fees can include services such as an appraisal or property survey. While the information from these services may be available to you, the main reason to hire individuals is to do these jobs to help the lender get independent verification that everyone understands the value of the property and its boundaries. Plan on these services, which can cost $300-$500, as part of the cost of borrowing money, since lenders want full verification of what the collateral for the loan—your property—is worth, and that there isn’t a disputed claim on it.

Closing the Deal

The process of closing a home purchase deal requires a lot of legal paperwork, as you’ll see when you and the seller sit down to sign everything and make it official. The final list of fees for closing costs may include things such as an escrow fee, which is charged for holding payments toward your taxes or insurance and disbursing them to the right recipient on the right due dates. There may be a separate “closing fee” that pays the closing agent for their time and work to get all necessary documents ready for the closing process. Closing costs can add up, so be aware of your income, first-time buyer status, or other factors that might qualify you for closing costs assistance. Your state’s housing finance agency could be a good place to start looking for these programs.

A separate collection of fees that typically are charged at closing include title services, which can add up to $2,000 on average, as it covers a number of items:

Title search: This determines whether anyone else has a financial claim on the property, such as a lien or an easement. This search, which can cost $75-$100, helps verify that the property can be sold.Title settlement: This fee, which varies, covers the administrative costs associated with the closing, such as escrow, survey, and notary services.Title insurance: Most lenders require you purchase this policy to protect the amount they lend. The cost can either be based on a percentage of the sale price or about $1,000 if the agency you choose uses a flat rate. You also have the option to purchase an owner’s title insurance policy to protect your financial investment in the home; however, this is not required.Recording fee: In most states, reporting that a property has changed hands results in a recording fee of around $125 on average. This covers the costs associated with filing deeds and other documentation with your county’s public records.

Lenders may have recommendations for where to purchase title services, but you can shop around for quotes, potentially generating savings.

Ongoing Costs, Fees, and Taxes

While closing will often include the first months or even years of certain ongoing costs, you will likely be responsible for additional ongoing bills once you are a homeowner. Local property taxes will be your responsibility, as will premiums on a homeowners insurance policy. If your property is part of a homeowners association, you’ll need to pay dues, which can range from only a few dollars to hundreds of dollars per month, depending on what amenities are part of the HOA. Lenders can often adjust your monthly payment to include estimated tax and insurance costs, with a slight adjustment at some point down the road if your tax or insurance costs are assessed higher or lower than expected. Doing this yields fewer bills for you to handle and can be worth it if you want to simplify your bill-paying experience. While not a fee or bill, once you own a home, you assume full responsibility for its upkeep, unlike in a rental situation. Many homeowners choose to deposit regular amounts into a separate savings account specifically for unexpected maintenance and repair needs. While you may not need this kind of fund for a long time, recurring deposits into a savings account can be a way to protect yourself in the case of an unexpected and large repair bill down the road.

Other Fees Homebuyers May Encounter

Home inspections are usually optional but are highly recommended. A general home inspection, which typically costs $300-$500, can reveal information about the state of the home or property that helps you decide whether the deal is right for you since it brings an expert’s understanding of the home’s level of maintenance and functionality. (Additional charges may arise should you need a specialized inspection, such as for pests or radon.) Individual lenders and some states and municipalities may have additional fees or fees that would otherwise be rolled into the above fee structures. Never hesitate to ask about an unfamiliar line item in your loan estimate or closing disclosure, and do your own research to ensure you know what you’re paying.

The Bottom Line

Buying a home can be a lucrative choice long term, since homes often retain their value over time, and even appreciate in value in many locations. However, upfront costs, ongoing payments, and maintenance expenses should be part of your budget so that you don’t choose a house that is too expensive to afford. Factor in the estimated costs of these fees and expenses at the beginning so you can set a purchase-price budget that accurately reflects what you want—and can—spend.