If you recently asked yourself, “What do you need to buy a house in 2025?”, you’re in the right place.
It’s no secret that buying a house is expensive. However, you may be surprised that it is a hidden cost when buying a home. Beyond listing prices, you can sneak into experienced buyers for the first time.
We are not talking about the usual post-transfer costs such as utilities or garbage services. This means a cost that doesn’t require much to pay before you get the key. This Redfin guide is here to become your checklist and breaks down the upfront costs you need to cover to actually close your home and make it yours.
Disassemble hidden costs when buying a home
Before you officially call your home, there are some upfront costs that you need to cover. Here are some things you need to know (and plan) before you get your key, from inspections to closing fees.
1. Closure costs
So how much does it cost to close? Simply put, closing costs are fees and expenses you pay before the key is handed over and the property officially becomes yours. These costs cover important services needed to complete the sale, including taxes, title insurance, valuation fees, and lender claims. This is what you’d expect:
Closure fees are paid on the day of closure, when ownership is officially transferred from the seller to you. Buyers usually pay between 2% and 5% of the home’s purchase price. So, for a $300,000 home, you can see the closing costs between $6,000 and $15,000. It’s not a small mass of change. That’s exactly why we’re giving you heads up.
2. Fixed Asset Tax
Property tax isn’t just about the cost you need when purchasing a home. This is an ongoing expense that will continue to pay as long as you own the property. These taxes are set by local governments and fund important community services such as public schools, roads, emergency responders such as fire and police stations.
In some cases, buyers will be asked to pay months of property taxes upfront upon closing. Therefore, you are not only responsible for your ongoing payments, but you may also be able to make some of that cost in advance. We recommend asking your lender or agent for the estimate early to avoid being caught off guard.
>>Read more: What is property tax? How do they work?
3. Homeowner Insurance
Think about homeowners insurance like the extra protection you buy for flights and mobile phones. This protects your home and belongings from unexpected damage and losses.
If you have a mortgage, your lender will need to purchase homeowner insurance to protect both you and them financially.
Typically, coverage includes:
Fireproof natural disaster wind storms and ail personal property (if stolen or damaged by a covered event, such as furniture, electronic equipment, clothing, etc.) is liable for any accidental damage to injuries or isolated structures of others (garages, sheds, fences, etc.).
Please note:
Typically, the first year premium is paid upfront to the closing premium. This ranges from $1,000 to $2,000 or more based on the size, location and coverage of the home. It is important to understand this amount as most policies include the amount you pay from your pocket before insurance coverage begins (the amount you pay begins). Standard policies typically do not cover certain risks such as floods, earthquakes, or certain mold. If you live in an area where these risks are prone to you, you may need to purchase additional insurance. Insurance coverage and costs will vary depending on your location and the insurance you choose, so compare options carefully.
4. PMI (Private Mortgage Insurance)
If you have less than 20% in your home, there is a good chance that your lender will need what is called a private mortgage insurance (PMI).
PMI is designed to protect lenders in case they stop paying their mortgage. Usually you pay as part of your monthly mortgage. Costs range from approximately 0.2% to 2% of the loan amount each year. The exact rate depends on factors such as your credit score, type of loan, and how much money you place.
Good news? Once you build a 20% share in your home, you can usually request that you remove it and lower your monthly payments.
5. Serious money
When your offer is accepted by the seller, you need to follow it with serious money. Okay, well – what is it and how much should you pay?
Ernest Money is usually a deposit of 1% to 2% of the purchase price, indicating that the seller is serious about buying a home. It will be held in escrow until closing and usually applies to a down payment or closing fee once the sale is over.
But here’s the important part. If you come back for reasons that are not covered by accident, you can lose serious money. Think of it as your way of showing real commitment with financial handshakes, table cash.
6. HOA Fees
When purchasing a home in a community with a Homeowner’s Association (HOA), one of the hidden costs is the HOA fee, which is usually charged monthly or annually. These fees are considered to be membership fees, and take care of the area clean, safe and well.
HOA fees are normally covered::
Maintenance of common spaces like parks, such as lawns, sidewalks, pools, gyms, clubhouse repairs, security services in common areas and gate maintenance.
The amount you pay can range from under $100 to under $100 to over $500 a month, depending on your community and what’s included. Be sure to check the HOA rules and fees before committing, and implement them in your budget.
7. Emergency funds
While this may seem obvious, experts recommend securing 1% of your home’s value each year for repairs and maintenance. For Exampleso, if you are buying a $6300,000 home, plan to save $63,000 a year due to unexpected issues. Whether it’s a small plumbing problem or a major system failure, you’re happy that you’ve planned ahead of time.
Unlike rentals, when something breaks in a new home, the budget is a hidden expense, as the repair bill is entirely your responsibility. From broken water heaters to unexpected roof leaks, emergency repairs are simply part of homeownership.
8. Home inspection fee
Although technically it’s optional, we highly recommend a home inspection and are often expected from lenders. Costs range from $300 to $500, depending on the size and location of the home.
The inspection checks for structural issues, roof condition, electrical systems, HVAC performance, and signs of flood or pests. This advance fee can save you thousands.
9. Travel cost
Whether you are moving across town or across the country, the price of a relocation will increase rapidly. The costs to keep in mind are as follows:
Truck rental or professional movers: Cost ranges from around $500 for local moves to over $3,000 for long-distance packaging supplies. Boxes, tapes, and padding can add up temporary storage: storage may be required if your new home is not ready. Utility setup and transfer: Fees for connecting electricity, internet, etc.
Travel expenses: Gas, hotels, or flights for long distance movements.
10. Utility setup fee
If you move from an apartment where the utility is included in your rent, switching to paying yourself can be a shock. Larger homes usually mean more heat, cooler, lighter rooms, pushing up utility bills.
Moving the utility to your name can lead to you being faced with activation fees or deposits, especially if your local provider has no recent payment history. These include:
Water and sewerage and sewerage and internet and cable waste and recycling
Some providers will charge you a pre-order between $50 and $200, especially if you need a technician. Get early estimates to avoid surprises on the moving day.
Final Thoughts: Plan Beyond Price Tax
Buying a home is a big milestone, but the purchase price is only part of the photo. The hidden costs of buying a home can easily add thousands to your budget, even before you unlock your front door. Preparing for these advances and ongoing expenses will help you feel more confident and less homeownership and surprise.
