This is the question I get asked most frequently! So let's talk.
To buy a house, you have to pay for two main things: your mortgage down payment and closing costs.
The required down payment will vary depending what type of loan you are getting, and also what you are buying (primary residence, investment property, land, etc.). You can always choose to put down more money than is required, if you have it. Read more about down payments here.
Closing costs are the fees associated with buying a house. These included title insurance, pro-rated taxes, transfer tax, mortgage preparation fee, appraisal, homeowner's insurance, and more. These typically add up to around $10,000-$13,000 (given the purchase price is around $100,000-$250,000).
For this example, let's say you are buying a primary residence with an FHA loan (very common for first time home buyers) that costs $180,000. FHA's required down payment is 3.5%, so the maximum mortgage is $173,700 (meaning you pay the remaining $6,300 at settlement).
$180,000 purchase price
+
$11,000 closing costs
=
$191,000 cash required
minus
$173,700 (mortgage amount)
=
$17,300 due at settlement
Now, what is due at settlement will vary based on two things: the deposit you've already put down when you submitted your offer and the amount of seller's assist the seller is giving you. Let's say for this example you gave a $2,000 deposit, and also are getting a full 6% seller's assist (maximum FHA allows).
$17,300
minus
$10,800 (6% seller's assist)
=
$6,500 due at settlement
You have already given your $2,000 deposit, so at settlement you will be paying $4,500. Not too bad!
As you can see, before we adjusted for seller's assist, we were close to $20,000. That's the amount I suggest you have in your bank account when purchasing a house. That way if you find the house of your dreams, you can submit a more competitive offer. Of course, in this example, the total cost of purchasing the home was way less than $20,000 - I've seen settlement costs as low as $1,500! So your costs really depend on the terms of your deal, specifically how much seller's assist you're getting.
Make sure you discuss all options with your Realtor and lender to make sure your settlement costs will work for you.
