Meridian Blog

Ah, living the American Dream: buying a home. After years of the debate between continuing to rent or buying, I felt it was time to make the largest purchase of my life, a house.

Through the process, I learned that the real cost of buying a home is more than just the down payment.

Disclaimer: all home purchases are unique, so not all the costs described below may apply to your homebuying experience, and there may be others that are not mentioned here. I have only been on the buyer’s side so far. Stay tuned for a blog from the seller’s perspective from another Meridian team member in the future.

Source: https://napkinfinance.com/napkin/buying-a-house/

Upfront Home Buying Costs

Down Payment

A down payment is the portion of a home’s purchase price that a buyer pays upfront, typically ranging from 3% to 20% depending on the loan type. It reduces the amount you need to borrow and can affect your loan terms, interest rate, and whether mortgage insurance is needed.

Earnest Money Deposit

An earnest money deposit is a sum of money a buyer puts down to show serious intent to purchase a home, usually submitted with the offer. It’s typically 1% to 3% of the purchase price and is held in escrow until closing, where it’s applied to the down payment or closing costs—though it may be forfeited if the buyer backs out without a valid reason. Having these funds easily accessible in cash is helpful in a competitive market where homes are moving quickly.

Home Inspection Fee

A home inspection is a professional evaluation of a property’s condition, where an inspector checks the home’s major systems—like the roof, plumbing, electrical, HVAC, foundation, and structure—for issues or safety concerns. It usually costs between $300 and $600, depending on the home’s size, age, and location.

• Note 1: A buyer should be mentally prepared to have to pay for more than one home inspection during the homebuying process. While in most cases, discoveries on the home inspection become part of the negotiations, issues may crop up that are beyond the scope of what a buyer is willing to take on, a crumbling foundation, for example.
• Note 2: I purchased a new-build home, and because there was a 12-month warranty on everything, I opted to wait until the 11-month mark for my home inspection, and any issues that may arise in the inspection will be addressed by the builder.

Appraisal Fee

An appraisal fee (~$300-$500) is the cost of having a professional evaluate the market value of a property, with the appraised value influenced by factors like property size, location, and uniqueness. This cost may be rolled into your closing costs or paid upfront and credited at closing.

• An appraisal is typically required when you’re purchasing a home with a mortgage. The lender orders it to ensure the home’s value matches the loan amount, helping them avoid lending more than the property is worth. If you’re buying with cash, an appraisal isn’t mandatory—but it’s still a smart way to confirm you’re paying a fair price.

Survey Fee (if required)

A survey fee covers the cost of having a professional surveyor confirm a property’s boundaries and identify any encroachments or easements, typically costing $300 to $800.

Home Buying Closing Costs

Closing costs are typically 2%–5% of purchase price. The following are typical fees included in the closing costs of a home. They do vary, and some may be paid separately, depending on your lender.

Loan Origination Fee

This is the fee charged by the lender for processing the loan. It is, on average, 1% of the total loan, but it can vary significantly.
Note: Shop around for lenders! Different lenders may offer different origination fees.

Underwriting Fee

This fee may be bundled with the origination fee, charged as a percentage of the loan, or as a flat fee. It covers the cost of evaluating your loan application for the lender.

Title Search & Title Insurance

Title fees in closing costs include the title search and title insurance, which ensure the property has a clear ownership history and protect against future legal claims. These fees typically range from $500 to $1,500, depending on the property’s location and purchase price.

Attorney Fees (in some states)

These fees cover the legal services provided during the home purchase, such as reviewing contracts, ensuring proper documentation, and representing you at closing. These fees typically range from $500 to $1,500, depending on the attorney’s rates and the complexity of the transaction, and are required in some states.

Additional Closing Fees

Credit report fee, recording fee, transfer taxes (varies by state or county), prepaid property taxes, prepaid homeowners insurance, prepaid Interest, HOA Fees (if applicable), notary fees, pest inspection fees, flood certification, and more.

Beyond Closing Costs

Realtor Fees

Historically, the buyers-agent fees were paid by the seller of the home. However, following a 2024 NAR Lawsuit, if you are a buyer and your agent is using an MLS, you will need to sign a written agreement with your agent before touring a home so you understand exactly what services will be provided, and for how much. The national average is 2.75% of the home sale price.

Note: Realtor fees can be included in negotiations, and in a buyer’s market, you may be able to negotiate with the seller paying those fees rather than needing cash up front.

Disclosure: Included is a general estimate of the funds required to purchase a $650,000 home with 20% down.

Additional Home Buying Costs

Moving Expenses

Truck rental, movers, packing supplies, etc.

Utility Set-Up Fees

May include deposits or connection fees, which typically range from $10 to $50.

Repairs/Renovations

Costs for renovations and repairs may be significant if not done by the seller or builder. If you are purchasing a “fixer-upper”, be sure to have estimates of repairs and a plan for covering those prior to purchase, especially if they impact the livability of the home.

Furnishings & Appliances

Estimates for furnishing a home range wildly depending on the size of the home, the timeline, the style, and the budget. Buyers may have furniture that they can use in their new home, or plan to buy all new.

Note: Wait until after your closing for major purchases! It may be tempting to order a new couch, taking advantage of a 0% interest rate on a new furniture store card, but opening a new credit card or charging a significant amount may impact your credit score and delay or cancel your closing. In that instance, you may not be refunded your deposits, so it is best to wait.

Maintenance Equipment

One item that is often missed in new home budgets is things like tools, lawnmowers, snowblowers, etc. If the move is from an apartment to a house with a yard, be sure to factor in what will be needed to care for your property.

Your Time

It is challenging to put a value on the final cost: your time. This is the one that caught me most by surprise in my recent experience. Home buying can be a long process, involving balancing work and time off to look at houses, meeting contractors, moving, and managing all the requirements for securing a loan.

But it will all be worth it in the end!

Here are my final words of advice on home buying:

• Work with a good Realtor: Especially if this is your first home purchase, work with a knowledgeable realtor you trust. You should feel comfortable asking questions and seeking for guidance. Your Realtor is working on your behalf, and wants you to find the perfect home as much as you do!
• Be patient and flexible: I went into this process with a detailed list of requirements and a short timeline. I did have to be flexible on some items, and look at lots of houses before finding the perfect home.
• Negotiate (or have your Realtor negotiate for you): There is no rule about what you can and can’t ask for. I would not recommend a crazy low-ball offer, but there is no reason not to make a reasonable offer, ask for credits for repairs, ask the seller to cover closing costs or realtor fees, etc.
• Be wary of scams: After I closed, I received a lot of mail and emails about fees I owed, offers on rates, and other phishing scams. Be vigilant, verify, and never give out your personal information.
• Give yourself and everyone around you grace: homebuying is a big commitment, financially and emotionally, and can induce stress and anxiety. Be kind to yourself and those around you!