Think it’s just the down payment? Think again.

So ready for a new home, you’ve got a nest egg set aside, and you’ve found the perfect home on Zillow. Suddenly, you’re not so sure that nest egg is enough—are there other expenses you hadn’t considered and how much do they cost?

These are important questions to ask yourself early. This article will help you answer those questions fast and get you on your way to homeownership. Let’s get to work!

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Costs of Buying a House

When you buy your first home, your upfront costs are more than the down payment.  Though most first-time homebuyers are prepared for the down payment, other costs don’t get as much air time. Below are the costs you should be prepared to cover before you start looking for a home.

Down Payment Amount

This is typically the largest expense of home buying, but it comes with some good news. The money you use in your down payment becomes equity in the house. That means that your $10,000 down payment means you own $10,000 worth of the property. Your equity grows as you pay your mortgage, with the portion that goes to the principal gaining equity.

Depending on the type of loan you use, your minimum down payment should be at least 3.5 percent of the home purchase price. Keep in mind that, for most loan types except VA loans, if your down payment is less than 20 percent, you will have to pay for private mortgage insurance (PMI). This cost will be added to your monthly mortgage payment.

To save on private mortgage insurance, you should look into a Federal Housing Administration, aka FHA mortgage—private mortgage insurance premiums are typically less expensive than with a conventional mortgage.

Earnest Money

When the seller accepts your offer, you pay earnest money upfront to proceed to the next steps in the buying process. Your earnest money shows that you are serious, and you’re moving forward with the purchasing process.

The earnest money is held in an escrow account. The amount you deposit is typically one to two percent of the home price. Your earnest money eventually becomes equity in your home after closing.

Cash Reserve Requirements

Your mortgage lender will want to see that you have some cash reserves to cover your monthly payment in case something goes wrong. How many months' worth of reserves depends on your lender. Two to three months of your mortgage payment is typical. Your lender will want to see the reserves in a savings account.

If you buy a home that comes with a homeowners association, you should also be prepared for HOA fees with your cash reserves.

Taxes

When you buy real estate, your lender will collect the first few months of your property tax payments right away. Be sure to leave room in your budget to cover these costs. You can find an estimate of your taxes through a site like Zillow or Trulia, but your lender will give you an accurate estimate.

Depending on the taxes in your area, you can expect to pay a few hundred to a few thousand dollars in property taxes.

Fees

Unfortunately, there are a lot of fees involved when buying a house. And it’s not just your lender, your real estate agent wants a cut too. Added together, the typical cost of fees for a home purchase is between two and five percent of the home purchase price. Common fees include:

• Credit report access fee

• County record filing

• Escrow fees

• Mortgage origination fees

• Mortgage processing fees

• Mortgage underwriting fees

• Title fees

• Realtor fees

Home Insurance

In order to fulfill your mortgage obligations, you will need to purchase a homeowners insurance policy. There are several types of homeowners insurance that you can choose from depending on the type of property you buy.

When it comes to home insurance, the more extensive the coverage the more expensive the policy. However, the better the coverage, the less expensive the claim. Be sure to check out the best and worst home insurance companies.

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Title Insurance

Title insurance is a very important part of buying a home. While title issues are rare, they’re always very costly. Title insurance costs anywhere from $300 to $1,000. You can usually find the best deal on title insurance by bundling the lender’s policy with the owner’s policy.

Inspection Costs

When you invest a few hundred thousand into a house, you want to be sure you’re making a sound investment. Paying for a home inspection can save you thousands if a problem is uncovered.

For example, if a home inspector uncovers termite damage, you can ask for a reduction in the home price or walk away from the deal. Termite damage costs the average homeowner $3,000 according to Home Pest Control. If you are buying in a high-risk area, be sure that your home inspector does a full pest inspection or hire a specialist in addition to the regular home inspection.

Below is a list of common specialized inspections you can get for your home in addition to the regular inspection.

Costs Source: HowMuchIsIt.org

Home Warranty

Home warranties are a special product you can use to cover systems like HVAC and plumbing. When you first buy a home, a home warranty can help you cover a breakdown of something expensive for a low cost. But not all home warranties are worth it!

Be sure you choose a warranty that does this or your claims for repairs may be denied. Additionally, read the terms and conditions carefully. For example, some warranties cover plumbing fixtures, but not the pipes in the walls. If a pipe bursts in the wall, you’ll be stuck with the bill and the home warranty premium.

Be sure you know what you’re getting for your money.

See More: Home Warranty vs. Home Insurance: How Do They Differ?

Frequently Asked Questions About Home Buying Costs

Conclusion: Save, Save, Save

The best thing you can do to prepare for a new home purchase is to save your money. The more you save, the easier it will be to cover all the costs of home buying. Plus, you won’t have to scramble to cover anything unexpected or choose between delaying the purchase and covering the cost of an added inspection.

To save effectively, you need to start with basic budgeting and cutting back where it makes the most sense. When it comes time to buy, don’t forget about home-buying programs that can help you save on purchasing costs!

And when you’re saving, don’t forget to save on car insurance with Insurify.