First-Year Costs of Homeownership
If you’re like most homebuyers on a budget, you’re probably paying close attention to the asking price of homes on the market. You may even have a ballpark figure or mortgage payment in mind. That’s a great start. But it’s important to be aware that the cost of buying a house is a bit more complicated than the asking price. We can help you prepare for all the costs and build a budget so you can take this exciting step with confidence.
Costs to Consider When Building Your Budget
Once you’ve found a home you like and your offer is accepted, it typically takes 30 to 45 days for the deal to close. During this time, there are several costs you’ll be responsible for. Factoring these early costs of homeownership into your plans will help you make the best choices for your finances.
Down payment
A typical down payment for a house is 3%–5% of the purchase price, depending on the type of loan.1
Tip: If you don’t have 3%–5% saved, a KeyBank Mortgage Loan Officer can see whether you qualify for a loan that requires as little as zero down.
Closing costs
You should also budget for closing costs equal to 3%–6% of the amount you’re borrowing. Closing costs include title insurance, appraisal fees, prepaid homeowners insurance and other fees.
Tip: Some lenders may allow you to roll the closing costs into your loan and in some instances a motivated seller may agree to pay some of the closing costs. This is offered on a case-by-case basis, and you need to understand and consider any tradeoffs.
A Look at the Numbers
To help show how much the down payment and closing costs may add to the purchase price of a home, here’s an example using a $200,000 home.2
Purchase Price of Home |
$200,000 |
Down Payment (3%) |
$6,000 |
Closing Costs (5%) |
$10,000 |
Total |
$216,000 |
A KeyBank mortgage loan officer can look at your income, assets, debt, and credit to create an accurate estimate of costs for homes you’re considering. They can also identify any incentives you may qualify for, like KeyBank’s interest rate discount.3 For example, on a $200,000 loan with a 6.25% interest rate, our .25% interest rate discount3 would save you up to $11,000 over the life of the loan.2
Additional Homeownership Costs
There are many recurring costs associated with owning a home. Here are a few of the costs you can expect:
Homeowners insurance
An annual cost, homeowners insurance premiums may often be paid as part of your monthly mortgage payment.
Property taxes
Sometimes referred to as real estate taxes, property taxes may be collected as part of your mortgage payment or paid separately.
Utilities
These include electricity, gas, water and sewer, trash, and recycling.
Home services
Make sure to budget for services like internet, phone, or home security.
Ongoing maintenance costs
Each year, consider setting aside at least 1% of your home’s purchase price for ongoing home maintenance costs. If you plan to do any renovations shortly after move-in, or if the home inspection turned up any issues that need immediate attention, make sure to factor those expenses in, too.
These costs can add up, but KeyBank offers multiple incentives and programs that can help. You may be able to finance up to 100% of your home through KeyBank. And, depending on where you live, you may also be eligible for a $5,000 credit that can go a long way to offsetting closing costs.
Our registered mortgage loan officers can help guide you through every step of the home-buying process. Contact us today.