The Widely Known Hidden Costs to Purchase a Home

With the insane housing market "sale rack" going on, buyers are definitely saving up for their down payment. However, it's not just saving for the down payment. Here is a simple break down of how much money you'll need before signing on that dotted line.

Earnest Money Deposit (EMD)
A buyer's EMD check is the key to opening escrow.For resale it's typically between 1-3% of the home price. For new construction, it sometimes depends on the builder and the home price.

Down Payment
FHA loans are currently 3.5% down. Conventional loans are typically 10-25% down depending on your credit. VA loans are 0% down. Check out your city or county programs for housing assistance programs, as well.

Home Inspection
This is paid directly to the home inspection company at time of service. Costs depends on who you choose and the home square footage. Fairly inexpensive.

Appraisal Fees
Unless it's an all cash deal, lenders will require an appraisal, which is usually a few hundred dollars, or more depending on home square footage.

Closing Costs
Always estimate high as these costs are all over the map from 1% to 8%. Your initial deposit could go toward this, but usually costs range between 3-4% of your loan.

Your lender is required to provide you with a Good Faith Estimate (GFE), which will break down all the costs line by line.

Here's an example of a $200,000 home:
Earnest Money Deposit (1-3%): $2,000-$6,000
Down Payment FHA (3.5%):     $7,000
Down Payment (10-25%):         $20,000-$50,000
Closing Costs (3-4%):               $6,000- $8,000