What to Budget for When Buying a Home

What to Budget for When Buying a Home: An Atlanta Real Estate Guide

Knowing what to budget for when buying a home may feel intimidating — but it doesn’t have to be. By understanding the costs you may encounter upfront, you can take control of the process and approach your homebuying journey with confidence.

Here are the key expenses experts recommend you plan for:

1. Down Payment

Saving for your down payment is likely one of your top priorities. But how much do you really need? A common misconception is that you must put down 20% of the purchase price. However, that’s not necessarily the case. Depending on your loan type and financial goals, you could qualify for options that require as little as 3.5% or even 0% down.

According to The Mortgage Reports:

"The amount you need to put down will depend on a variety of factors, including the loan type and your financial goals. If you don’t have a large down payment saved up, don’t worry—there are plenty of options available . . ."

A trusted lender can help you explore loan options, down payment requirements, and even assistance programs you may qualify for. By partnering with an expert, you’ll gain clarity on what’s possible and what works best for your unique situation.

2. Closing Costs

Another essential expense to budget for is closing costs. These fees cover a variety of services involved in the transaction, such as appraisals, title insurance, and loan origination. Bankrate explains:

"Mortgage closing costs are the fees associated with buying a home that you must pay on closing day. Closing costs typically range from 2 to 5 percent of the total loan amount."

Your lender will guide you through the specifics and provide an estimate, so you’ll know what to expect. Additionally, keep in mind that you’ll also need to account for your real estate agent’s professional service fee, unless the seller covers it. Fortunately, your agent will outline these details ahead of time, ensuring no surprises.

3. Earnest Money Deposit (EMD)

An earnest money deposit is another potential cost to consider. Typically ranging from 1% to 2% of the home’s price, this deposit shows the seller you’re serious about your offer. However, this isn’t an added expense—it’s credited toward your down payment or closing costs.

As Realtor.com describes:

"It tells the real estate seller you’re in earnest as a buyer . . . Assuming that all goes well and the buyer’s good-faith offer is accepted by the seller, the earnest money funds go toward the down payment and closing costs."

While not always required, an EMD can strengthen your offer. Your real estate advisor will help you determine whether it’s necessary and guide you through the process.

Bottom Line

The key to a successful homebuying savings strategy is understanding what expenses to prepare for. By budgeting for your down payment, closing costs, and potential earnest money deposit, you’ll be better equipped to navigate the process. With an expert real estate agent and a trusted lender by your side, you’ll have the insights you need to plan ahead and achieve your homeownership goals with confidence.