Buying your first home is exciting — and terrifying. The biggest surprise for most first-time buyers? The purchase price is just the beginning. Between the down payment, closing costs, inspections, insurance, and a dozen other expenses, the total out-of-pocket cost can be 30–40% more than you expected.
Let's walk through every single cost so there are no surprises. We'll use a $350,000 home as our example throughout this guide — close to the national median home price in 2026.
The Complete Cost Breakdown
| Cost Category | Typical Range | On a $350K Home |
|---|---|---|
| Down payment (5–20%) | 3–20% of price | $17,500–$70,000 |
| Closing costs | 2–5% of price | $7,000–$17,500 |
| Home inspection | $300–$600 | $400 |
| Appraisal | $300–$500 | $450 |
| Homeowners insurance (first year) | $1,500–$3,500 | $2,300 |
| Property tax escrow | 2–6 months prepaid | $1,500–$4,500 |
| Moving costs | $1,000–$5,000 | $2,500 |
| Immediate repairs/updates | $1,000–$5,000 | $2,500 |
| Furniture and essentials | $2,000–$10,000 | $5,000 |
| Total (with 10% down) | $49,150–$72,650 |
Yes, you're reading that right. On a $350,000 home, you might need $50,000–$73,000 in cash. Let's break down each category so you can plan properly.
1. Down Payment
The down payment is the biggest single expense, and it's also the most misunderstood. Many first-time buyers think they need 20% down — that's $70,000 on a $350,000 home. Here's the reality: you might need as little as 0–3.5%.
Down Payment by Loan Type
| Loan Type | Minimum Down Payment | On $350K Home |
|---|---|---|
| VA Loan | 0% | $0 |
| USDA Loan | 0% | $0 |
| FHA Loan (580+ credit) | 3.5% | $12,250 |
| Conventional (first-time buyer) | 3% | $10,500 |
| Conventional (standard) | 5% | $17,500 |
| Conventional (avoid PMI) | 20% | $70,000 |
The PMI trade-off: If you put down less than 20%, you'll pay private mortgage insurance (PMI). This costs $50–$250/month depending on your loan amount, credit score, and down payment percentage. PMI automatically drops off when you reach 20% equity.
For many first-time buyers, putting down 5–10% and paying PMI temporarily makes more sense than waiting years to save 20%. Use our mortgage calculator to see how different down payments affect your monthly payment.
Down Payment Assistance Programs
Don't have enough saved? There are over 2,500 down payment assistance programs across the US. These include:
- State housing agency programs — most states offer grants or low-interest loans for first-time buyers
- FHA loans — accept down payment gifts from family members (100% of the down payment can be a gift)
- Local government grants — many cities and counties offer $5,000–$20,000 in down payment assistance
- Employer programs — some employers (especially large companies) offer down payment assistance as a benefit
- IRA withdrawal — first-time buyers can withdraw up to $10,000 from a traditional IRA without the 10% early withdrawal penalty (you still pay income tax)
2. Closing Costs
Closing costs are the fees associated with finalizing your mortgage. They typically run 2–5% of the purchase price. On a $350,000 home, that's $7,000–$17,500. Here's what's included:
| Fee | Typical Cost | Who Pays |
|---|---|---|
| Loan origination fee | 0.5–1% of loan | Buyer |
| Appraisal fee | $300–$500 | Buyer |
| Title search | $200–$400 | Buyer |
| Title insurance (lender's) | $500–$1,000 | Buyer |
| Title insurance (owner's) | $500–$1,500 | Buyer (optional but recommended) |
| Attorney fees | $500–$1,500 | Buyer |
| Recording fees | $50–$250 | Buyer |
| Survey | $300–$600 | Buyer |
| Prepaid property taxes | 2–6 months | Buyer |
| Prepaid homeowners insurance | 1 year upfront | Buyer |
| Prepaid mortgage interest | Daily rate x remaining days in month | Buyer |
| Transfer taxes | Varies by state | Varies (buyer or seller) |
Pro tip: You can negotiate closing costs. Ask the seller to contribute to closing costs (called "seller concessions") — especially in a buyer's market. Sellers can typically pay up to 3–6% of the purchase price toward your closing costs.
3. Home Inspection
A home inspection costs $300–$600 and is one of the most important investments you'll make. A qualified inspector examines the home's structure, electrical, plumbing, HVAC, roof, foundation, and more. The inspection typically takes 2–3 hours and results in a detailed report.
Never skip the inspection. Seriously. We can't stress this enough. An inspection can uncover issues that cost $10,000–$50,000+ to fix. Some common findings:
- Roof issues ($6,000–$30,000 to replace)
- HVAC problems ($5,000–$20,000 to replace)
- Foundation cracks (repair costs: $2,000–$15,000+)
- Plumbing issues ($1,000–$10,000)
- Electrical problems ($1,000–$5,000)
- Water damage or mold ($2,000–$10,000)
If the inspection reveals major issues, you can negotiate with the seller to fix them, reduce the price, or walk away entirely.
Additional Inspections to Consider
- Radon testing: $100–$200 (recommended in all homes)
- Termite/pest inspection: $75–$150 (essential in southern states)
- Mold testing: $200–$600 (if visible mold or musty smell)
- Sewer scope: $100–$300 (for older homes)
- Well water testing: $100–$500 (if on well water)
- Septic inspection: $250–$500 (if on septic system)
4. Appraisal
Your lender requires an appraisal ($300–$500) to confirm the home is worth what you're paying. The appraiser is an independent third party who evaluates the property's condition, features, and comparable recent sales.
If the appraisal comes in lower than the purchase price, you have options:
- Negotiate a lower price with the seller
- Pay the difference in cash
- Challenge the appraisal (provide comparable sales data)
- Walk away (if your contract has an appraisal contingency)
5. Homeowners Insurance
Your lender will require homeowners insurance, and you'll typically need to pay the first year's premium at closing. The national average is about $2,300/year, but costs vary dramatically by state — from $900 in Hawaii to $4,800 in Oklahoma.
For a deep dive into what's covered, what's not, and how to save money, read our complete homeowners insurance guide. Here's the short version: