The amount you need depends on a few key pieces: the home price, your down payment, closing costs, and your ongoing reserves. Here’s how it breaks down:
Down payment
Conventional loans: often 3–20% of the purchase price
FHA loans (US): as low as 3.5%, with lower credit score requirements
VA loans (US, for eligible veterans): often 0% down
20% down avoids private mortgage insurance (PMI) on conventional loans, but plenty of buyers put down less
Closing costs
Typically 2–5% of the purchase price, covering things like:
Loan origination fees
Appraisal and inspection fees
Title insurance and search
Attorney fees (varies by state)
Prepaid property taxes and homeowners insurance
Example on a $300,000 house
20% down: $60,000 + ~$6,000–15,000 closing costs = $66,000–75,000
5% down: $15,000 + ~$6,000–15,000 closing costs = $21,000–30,000
Other things to budget for
Emergency/reserve fund (many lenders want to see 2–6 months of mortgage payments in reserve)
Moving costs
Immediate repairs or furnishing
What affects how much house you can afford
Income and debt-to-income ratio (lenders typically want your total debt payments, including the new mortgage, under ~36–43% of gross income)
Credit score (affects your interest rate)
Interest rates at the time you buy
Closing costs are things you can negotiate a seller to pay for you. There are some loans that will work the closing costs into the loan.
Contact me if you’d like to talk to a lender and I’ll give you some recommendations!
