The purchase price is just the starting line. Between signing a contract and moving in, buyers face thousands in costs that don’t appear on the listing sheet. Here’s what to budget for.
Closing Costs: 2-5% of the Purchase Price
On a $400,000 home, closing costs typically run $8,000 to $20,000. These include:
- Loan origination fee: 0.5-1% of the loan amount
- Appraisal: $400-$700
- Title search and insurance: $1,000-$3,000
- Attorney fees (required in some states): $500-$2,000
- Recording fees: $100-$500
- Transfer taxes: varies wildly by state and county
- Prepaid property tax and insurance: 2-6 months of escrow deposits
- Prepaid interest: from closing date to end of month
Some of these are negotiable. Many are not. The lender is required to provide a Loan Estimate within three business days of application, and a Closing Disclosure three days before closing. Read both carefully.
The Inspection Stack
A general home inspection runs $300-$500. But depending on what it finds, you may need specialists:
- Termite/pest inspection: $75-$200
- Radon testing: $150-$300
- Sewer scope: $200-$400
- Mold testing: $300-$600
- Roof inspection: $200-$500
- Foundation specialist: $300-$800
In competitive markets, some buyers waive inspections to strengthen their offer. This is one of the most expensive mistakes a first-time buyer can make. A $500 inspection can save you from a $40,000 foundation problem.
PMI: The Cost of Less Than 20% Down
If you put down less than 20%, you’ll pay Private Mortgage Insurance. PMI rates depend on your credit score and loan-to-value ratio, but typically run 0.5-1.5% of the loan amount per year.
On a $380,000 loan (5% down on a $400,000 home), that’s $1,900 to $5,700 per year, or $158 to $475 per month. PMI can be canceled once you reach 20% equity, but reaching that threshold takes years in a flat market.
Immediate Repairs and Upgrades
The median buyer spends $3,000 to $5,000 on immediate repairs and changes after closing. Common expenses include:
- Rekeying locks: $150-$300
- Paint (even one room): $300-$800
- Minor plumbing or electrical fixes: $200-$1,000
- Appliance replacement: $500-$3,000
- Window treatments: $500-$2,000
- Landscaping cleanup: $200-$1,000
These costs hit during the same month you’re covering closing costs, moving expenses, and your first mortgage payment. Budget accordingly.
Moving Costs
A local move with professional movers runs $800-$2,500. A long-distance move can hit $5,000-$12,000 depending on distance and volume. DIY with a rental truck still costs $300-$1,500 plus your time and back.
Utility Setup and Deposits
New service activation and deposits can run $200-$500 for water, gas, electric, and trash. Some utilities require deposits based on credit checks.
The Real First-Year Total
Here’s what the first year of a $400,000 home purchase actually costs beyond the down payment:
| Category | Estimated Cost |
|---|---|
| Closing costs (3%) | $12,000 |
| Inspections | $800 |
| Immediate repairs | $3,500 |
| Moving | $1,500 |
| Utility deposits | $350 |
| PMI (if <20% down) | $3,000 |
| Additional first-year costs | $21,150 |
That’s on top of your down payment and monthly mortgage. Plan for it.
Use the HomeStats affordability calculator to run complete numbers for your situation, and check state-by-state data for local insurance, tax, and utility costs.
For the full breakdown of every cost from purchase through eventual resale, read The Resale Trap.