Buying your first home comes with a lot of numbers.

Purchase price.
Down payment.
Closing costs.
Earnest money.
Inspection.
Appraisal.

And if you’re a first-time buyer, it can be difficult to figure out which expenses are actually required, which ones happen before closing, and how much money you should realistically have saved.

The good news? You may not need as much money as you think. But you also don’t want to walk into homeownership with every dollar you’ve saved tied up in the purchase. Let’s break down the money you’ll want to think about before buying your first home.

Your Down Payment

The down payment is the portion of the home’s purchase price that you’re paying upfront rather than financing with your mortgage.

And here’s one of the biggest misconceptions I hear from first-time buyers: You do not necessarily need 20% down to buy a home.

The amount you’ll need depends on your loan program, your financial situation, and other factors. There are mortgage options that allow qualified buyers to purchase with significantly less than 20% down.

So if you’ve been thinking: “I’ll never be able to buy because I don’t have $80,000 sitting around for a 20% down payment…”

Take a breath. You may have more options than you realize. Your lender can walk you through the loan programs you’re eligible for and explain what each option means for your monthly payment and upfront costs.

Closing Costs

This is where things can get confusing. Your down payment isn’t the only money you’ll need at closing. Closing costs are the various expenses associated with getting your mortgage and completing the purchase of the property.

Depending on your situation, they can include things such as:

• Lender fees
• Title and settlement-related expenses
• Recording fees
• Prepaid interest
• Property taxes
• Homeowners insurance
• Other required prepaid or escrow items

The exact amount varies from one transaction to another.

That’s why I don’t want buyers to think: “If I have my down payment saved, I’m ready to buy.”

Your lender should give you an estimate of your expected costs so you can plan ahead.

Earnest Money

Earnest money is another expense you’ll hear about early in the buying process. When you make an offer, you may be required to put down an earnest money deposit. It essentially demonstrates that you’re serious about purchasing the home.

But here’s the important part: Earnest money generally isn’t an additional expense on top of your purchase price.

When the transaction closes, it’s typically credited toward the money you’re already bringing to the table. The amount of earnest money and what happens to it if the transaction doesn’t close depends on the contract and circumstances of the transaction. We’ll definitely be doing a whole blog on earnest money because there’s WAY more to this one.

Don’t Forget About the Home Inspection

Once you’re under contract, you’ll likely have a home inspection. The inspection is typically paid for by the buyer and happens before closing. Think of it as an opportunity to learn more about the condition of the property—not a guarantee that the house will be perfect.

Your inspector may evaluate things such as:

• Major systems
• Structure
• Roof
• Plumbing
• Electrical components
• Heating and cooling
• Windows
• Other visible components of the home

The cost varies depending on the property and inspection services you choose, so it’s smart to budget for it separately from your down payment and closing costs.

What About the Appraisal?

If your loan requires an appraisal, that’s another potential upfront expense to plan for. An appraisal is different from a home inspection.
The inspection is primarily about the condition of the home. The appraisal is about the property’s value for lending purposes.
Your lender typically orders the appraisal as part of the mortgage process. Again, the exact cost and timing can vary, so your lender can tell you what to expect for your particular loan.

Then There’s Everything That Happens After Closing

Here’s the part nobody thinks about until they’re standing in their empty living room holding a pizza box. 😂

You bought the house! Now you need to actually live in it.

Consider setting aside money for:

• Moving expenses
• Utility deposits or transfers
• New locks
• Cleaning
• Paint
• Furniture
• Appliances
• Window coverings
• Landscaping
• Immediate repairs or projects

You don’t need to renovate the entire house on day one. Actually, I’d strongly encourage you not to feel like you have to. Give yourself time to live in the house and figure out what you actually want to change.

Don’t Spend Every Dollar You Have on the Purchase

This might be my biggest piece of advice for first-time buyers. Getting to the closing table isn’t the finish line. You still have to own the house after you get the keys. And houses have a funny habit of occasionally needing things at the least convenient possible moment. A water heater doesn’t care that you just bought a couch. An air conditioner doesn’t care that you just paid your closing costs. That’s why I would much rather see a buyer purchase a home that fits comfortably within their budget and leave themselves some financial breathing room than stretch every dollar just to get into a more expensive house.

So…How Much Money Should I Actually Have Saved?

There isn’t one magic number that works for every buyer. Your savings goal should account for more than just your down payment.

Think about your total cash needs:

Before Closing

• Down payment
• Earnest money
• Inspection
• Appraisal, if applicable
• Other transaction-related expenses

At Closing

• Remaining down payment
• Closing costs
• Prepaid taxes and insurance
• Other required funds

After Closing

• Moving expenses
• Immediate home needs
• Emergency savings
• Ongoing maintenance

And remember: the earnest money you’ve already deposited is generally credited toward your purchase at closing. You don’t simply pay it again.

What If I Don’t Have a Huge Amount Saved?

Don’t automatically count yourself out. There may be loan programs, assistance programs, seller contributions, or other options that could affect how much cash you need to bring to the table. Those options depend heavily on your individual circumstances and the current programs available, so this is where talking with a knowledgeable lender can make a huge difference. And if you’re buying in Illinois, it’s worth asking your lender specifically about programs you may qualify for as a first-time buyer.

Don’t assume you know your options until you’ve actually asked.

The Goal Isn’t Just to Buy a House

It’s to buy a house and still be okay afterward. That’s the part I really want first-time buyers to understand. You don’t want to spend every penny you’ve saved just to get the keys. You want to be able to move in, unpack the boxes, order the celebratory pizza, and breathe. Because homeownership should feel exciting—not like you’re waiting for the next financial emergency.

Tip 💡 Don’t ask only, “How much do I need to buy a house?”

Also ask: “How much do I want left after I buy the house?”

That question can completely change the way you approach your home search.

Ready to Figure Out What Your Numbers Could Look Like?

You don’t need to have everything figured out before you start asking questions. A lender can help you understand your financing options and estimated cash requirements, while your Realtor can help you understand what those numbers mean when you’re actually shopping for homes.

If you’re a first-time buyer looking in Plainfield or the surrounding Southwest Suburbs, I’m happy to help you understand the process, figure out what questions to ask, and make sure you’re looking at the whole picture—not just the price on the listing.

Because buying your first home is a big deal. You deserve to understand where your money is going before you sign on the dotted line.