First-Timer Primer: How Much Cash Do You Need to Buy a Home?

• June 23rd 2025

by UrbanTurf Staff

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This week, UrbanTurf is running a series of primers to help new homebuyers navigate all the ins and outs associated with purchasing their first home. 

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Here is a rundown of some of the up-front costs associated with buying a home.

• Earnest Money Deposit -- After making an offer and coming to an agreement with the home seller, a buyer is generally expected to pay 1 to 3 percent of the purchase price immediately. This earnest money deposit is held until closing, when it becomes part of the down payment. If the buyer backs out of the deal unexpectedly, the seller keeps the money. If the deal falls through due to a contingency that was previously laid out, the buyer would get the money back. On a $600,000 home, the earnest money deposit would be between $6,000 and $18,000.
• Home Inspection -- The next outlay is generally the home inspection, which costs in the neighborhood of $400 to $800.
• Down Payment -- Your down payment will likely vary from between 3.5 percent of the purchase price, with an FHA-backed loan, to 20 percent. So, for a $600,000 home, you would need to put between $21,000 (3.5 percent) and $120,000 (20 percent) down. Down payments of greater than 20 percent are also an option and would lead, of course, to smaller mortgage payments and most likely, a lower interest rate.
• Closing Costs -- Closing costs typically range from 2 to 5 percent of the purchase price. Included in the sum are title insurance, loan-processing costs, taxes, and various other fees. These costs are sometimes negotiable; in certain markets, an eager developer may defer closing costs. For our $600,000 example, closing costs would range from $12,000 to $30,000.
• Homeowner's Insurance and Moving Costs -- Every mortgage needs to be insured. The first annual premium is usually paid at closing. Be sure to also keep some cash on hand for moving costs, which will vary based on how large a place you are moving from and how much stuff you have.

This article originally published at http://dc.urbanturf.production.logicbrush.com/articles/blog/how-much-cash-do-you-need-to-buy-a-home/15126.