The Down Payment Is Not the Finish Line

Most people spend months — sometimes years — saving for a down payment. They hit the number, feel incredible, and then find out at closing that they need a whole additional pile of money they didn’t fully account for.

Closing costs often run about 2–5% of the home’s purchase price, depending on the loan, the location, and the fees involved. On a $350,000 home, that can mean roughly $7,000–$17,500 due at closing, on top of your down payment. That total can include lender fees, title charges, appraisal fees, prepaid property taxes, homeowner’s insurance, and, in some states, attorney fees.

Your lender is required to give you a Loan Estimate early in the process and a Closing Disclosure at least three business days before closing. Read both carefully. If something looks unfamiliar, ask.

PMI: What It Is and How to Get Out of It

If you put less than 20% down on a conventional loan, you’ll usually pay Private Mortgage Insurance, or PMI. PMI protects the lender — not you — if you default. The cost varies, but it can add a meaningful amount to your monthly payment.

The good news is that PMI is usually not permanent. In general, you can request cancellation once your mortgage balance reaches 80% of the home’s original value, and PMI must be terminated automatically when the balance reaches 78% of the original value if you’re current on payments. That means it’s worth tracking your loan balance and asking your loan servicer what it requires.

The Monthly Payment Has More Pieces Than You Think

When a lender pre-approves you and gives you a payment estimate, they’re typically quoting PITI: principal, interest, taxes, and insurance. HOA dues may not be included, property tax estimates can change, and homeowner’s insurance can come in higher than expected.

Here’s what the full monthly cost of homeownership can include:

• Mortgage principal and interest
• Property taxes
• Homeowner’s insurance
• PMI, if applicable
• HOA dues, if applicable
• Maintenance savings

That last category is the sneaky one. A common rule of thumb is to budget about 1–2% of the home’s value per year for maintenance, though actual costs vary by the home’s age, condition, and systems. On a $350,000 home, that works out to about $3,500–$7,000 per year.

The Inspection Is Easy to Skip, but Risky

Some buyers waive the inspection to make their offer more competitive in a hot market. That can work out fine, but it can also mean discovering after closing that the roof needs replacing, the foundation has issues, or the electrical system needs work.

A home inspection can give you useful leverage before you close. If the inspector finds significant problems, buyers may be able to negotiate repairs, ask for credits, renegotiate the price, or walk away if the contract allows it. Skipping the inspection may make an offer cleaner, but it also removes one of the best chances to spot expensive problems before the purchase is final.

Rate Shopping Is Worth the Effort

Your interest rate on a 30-year mortgage has a major impact on your total cost. Even a modest difference in rate can change your monthly payment and the total interest paid over time.

Get quotes from at least three lenders. A bank, a credit union, and a mortgage broker are a reasonable starting mix. Multiple mortgage inquiries made within a short shopping window are generally treated as a single inquiry for credit scoring purposes, though the exact window varies by scoring model and is often described as about 14 to 45 days.

A Few More Things Worth Knowing

• Your pre-approval amount is not your budget. Lenders may approve you for more than you will feel comfortable carrying month after month. Run your own numbers based on your real life, not just the maximum a lender offers.
• First-time homebuyer programs exist. Many states offer programs that can help with down payments, closing costs, or loan terms for eligible first-time buyers. Check your state’s housing finance agency website and ask your lender what programs may apply to you.
• Title insurance and homeowner’s insurance are different. A lender’s title insurance policy generally protects the lender, while an owner’s title policy can protect you against ownership disputes that surface later. They’re not the same thing, and it’s worth understanding both before closing.