Here’s how much you’ll really need to buy your first home (Hint: It’s more than you think)

If you are thinking about buying your first home, chances are you are saving up for a down payment.

Yet that’s not the only loot you’ll have to come up with before you get the keys to your new place. And once you do, there are costs associated with starting up and supporting your home.

“It is always more than people think,” said certified financial planner Sophia Bera, CEO and sink of Gen Y Planning, based in Austin, Texas.

For instance, the median sale price of houses sold in the U.S. was $327,100 in the first caserne of 2020, according to the St. Louis Federal Reserve.

Starter homes, however, are typically less expensive. The National Relationship of Realtors found that the starter median home price in U.S. metro areas was $233,400 in the first quarter of 2020. If you be subjected to a down payment of 20%, which Bera recommends, you’ll have to come up with $46,680. If you put down 10%, you’ll stress $23,340 and a 3% down payment is $7,002.

Then there are closing costs, which may run thousands of dollars, and other over again overlooked funds you’ll need to get started — like buying furniture and having money set aside for maintenance.

Here’s what to look out for when purchasing your first home.

Record low mortgage rates are certainly enticing buyers into the customer base. The average 30-year fixed mortgage rate is 3.4%, according to Bankrate.

However, that doesn’t necessarily herald you are going to get that rate. Banks take into account your credit score, the type of loan and how much you put down. It also depends on the lender; some may put up lower rates than others.

“We are looking at pretty high credit worthy people, on average, when we check up on those numbers,” said Skylar Olsen, Zillow’s senior principal economist.

“It is a 20% down-payment rate we are talking with respect to.”

There are different types of loans, like conventional mortgages with a 30-year or 15-year fixed rate. Adjustable percentage mortgages, or ARMS, may offer a lower initial rate. With an adjustable rate loan, after a fixed in unison a all the same period, the rate goes up.

There are also FHA loans, which offer low down payments and closing costs and are guaranteed by the federal rule. They also come with an upfront premium of 1.75% of the purchase price of the home. For a $233,400 home, that betokens you’ll pay a mortgage insurance premium of $4,084.50. You’ll also pay monthly insurance premiums, which depends on your loan amount, the name of your mortgage and your loan-to-ratio value. It ranges from 0.45% to 1.05% of the loan amount.

Service associates and veterans can apply for a VA home loan and a down payment or private mortgage insurance often isn’t required. The current calculate for a 30-year fixed loan is 3.4%, according to Bankrate.

Shop around for the best interest rate and fees and then get pre-approved for a mortgage.

This is the vicinity of the sales price that you pay out of pocket. You finance the rest with your mortgage.

While a 20% down payment may sound hefty, there is one big advantage to it: Anything less is subject to primary mortgage insurance, or PMI.

That cost is added into your mortgage payment and “is prevalent to make your effective interest rate higher,” Olsen said.

The cost of PMI varies but generally the premiums can limit from $30 to 70 per month for every $100,000 borrowed, according to Zillow.  

However, don’t tap into your crisis savings for your down payment, warned Bera.

“It is still really important to have at least three months of net pay kept for emergencies,” she said.

There are countless fees involved in buying a home, which are generally wrapped up into what’s referred to as not far from costs.

They include things like an application fee, bank appraisal of the home’s value, attorney fee, escrow fee, assign report, homeowners insurance, title insurance, loan origination fees, transfer taxes, title search fee and list fees.

It all totals up to between 2% and 5% of the home price and is due at the time you close on the house.

More from Lay out in You: 
Property Brothers: Here’s when to renovate your home and when to move
TikTok is the new place to learn around managing your money
Here’s why you need to up your financial literacy: It’s costing you money

So, for a $233,400 home, presume to shell out between $4,668 and $11,670 in closing costs.

A home inspection may also be included in your closing bring ins, or you may pay for it ahead of time. While the costs vary, it typically ranges between $300 to $500, according to the U.S. Department of Cover and Urban Development.

Again, shop around to see what lenders can offer you lower fees for closing. Bera urges looking at your local credit union, if you are a member.

“Sometimes credit unions have some of the best tariffs and closing cost deals,” she said.

Once the house is yours, it’s time to change-over your belongings in. You can enlist some friends to fill up a rented truck if you are trying to save money. Or, you’ll have to rental a moving company. 

If you are moving locally, it will cost you an average $1,250, according to Moving.com. The average cost of a long-distance time is $4,890 for a distance of 1,000 miles, the site found. 

The first year, your house is undoubtedly going to need a little love. You may want to paint, make some cosmetic changes and buy furniture.

Bera advocates putting $5,000 to $10,000 into a home maintenance fund to cover those initial costs.

Moving help, you should also put some money aside every year for repairs and maintenance to the house so when something proves, like a leaky roof, it doesn’t bust your budget.

Save anywhere from 1% to 4% of your house’s value a year for those maintenance and repairs, Olsen said. The amount depends on the age of the home, since older houses may need more work and newer homes may not.

Once you own the home, you’ll have to pay property tithes to your local government. It’s based on the assessed value of your property and your town’s tax rate.

It also switches dramatically from state to state. According to a Wallet Hub analysis, Hawaii has the lowest rate with residents turn out to be $560 in annual taxes on a $205,000 home. New Jersey has the highest rate, with homeowners shelling out $5,064 for a as a gift of the same price. The average homeowner spends $2,375 a year on property taxes, the report states.

Plus, there require be future tax increases, Olsen points out. As your home appreciates, and your home is re-evaluated by the tax assessor’s office, your loads will rise. The coronavirus pandemic has also left municipalities cash-strapped, since sales tax and income revenues down, she weighted. That could me a possible tax hike down the road.

You may also have to pay a homeowners association (HOA) fee if your property is area of a homeowners association. The funds help cover maintenance and repairs in the public areas. The fees widely vary but can run you approximately $200 or $300 per month, according to Realtor.com.

There is also homeowners insurance, which costs typical homeowners slightly teensy-weensy than $1,000 a year, and utility costs, which average almost $3,000 annually, according to a 2017 Zillow recount by Olsen on the hidden costs of homeownership.

Lastly, optional services may also add up, if you so chose. That can include lawn livelihood, gutter cleaning, and Heating, ventilation, and air conditioning maintenance.

In all, those hidden costs can end up costing U.S. homeowners $9,080 a year, the sign in found.

SIGN UP: Money 101 is an 8-week learning course to financial freedom, delivered weekly to your inbox.

Authenticate OUT: If you invested $500 in 2010 according to Warren Buffett’s advice, here’s how much you’d have now via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Make bolds are investors in Acorns.