Buying your first home is a huge milestone—but if you’re only budgeting for the down payment, you could be in for a surprise. Many first-time buyers don’t realize there are additional expenses involved, like closing costs and other often-overlooked fees. Understanding these upfront costs is key to avoiding unexpected financial stress.
So, buying your first home? Buckle up! In this guide, we’re breaking down those “hidden” costs, explaining what to expect with closing fees, and sharing smart tips to help you save money. We’ll make the homebuying process a whole lot clearer—and even a little exciting.
Closing costs are the one-time fees you pay at the end of the home buying process—usually at the “closing” appointment where ownership officially transfers. These fees typically range from 2% to 5% of the home's purchase price, depending on your loan type, location, and lender.
For example, on a $300,000 home, you can expect to pay between $6,000 and $15,000 in closing costs.
Charged by your lender for processing and underwriting your mortgage loan. This fee is usually 0.5% to 1% of the loan amount.
A professional home appraisal is required by most lenders to confirm the home’s value. Cost: $450-650.
Although optional, a home inspection is highly recommended for uncovering potential issues. Typical cost: $300–$500.
Bonus Tip: Consider additional inspections such as radon testing, especially in areas where elevated levels are common. Radon is an odorless, colorless gas linked to serious health risks, and if it's found in high levels, mitigation systems may be needed—which can cost around $800–$1,500.
Ensures the property has no outstanding liens or ownership disputes. When getting a mortgage, you are required to purchase a lender’s title insurance policy, which typically costs between $700 and $1,500. While most buyers pay for the lender’s policy, owner's title insurance is optional but recommended.
Escrow companies handle the transaction and hold funds until all conditions are met. The fee is often split between buyer and seller.
At closing, lenders often collect the full first year of homeowners insurance and a few months of property taxes upfront. This covers upcoming bills—like summer and winter tax payments—and ensures your escrow account has enough to pay them when due.
These fees are charged by your local government to legally record the property transaction.
If your down payment is under 20%, you may be required to pay PMI, which protects the lender in case of default. Some lenders allow you to pay part of this cost at closing.
In addition to closing costs, first-time buyers should also plan for:
Even though these aren’t part of your official closing costs, they can quickly add up and affect your overall budget.
Yes! Here are some ways first-time homebuyers can save money on closing costs:
Why Choosing the Right Lender Matters
Not all lenders are created equal—and when it comes to closing costs, transparency is everything. The right lender can make a major difference in both your experience and your wallet. At My City Home Loans, we’re committed to clarity, education, and no last-minute surprises.
Here’s why working with us is a smart move:
We take the time to explain fees, answer questions, and guide you every step of the way. When you work with My City Home Loans, you get more than a loan—you get a team that truly has your back.
Buying a home is more than just saving for a down payment. When you're prepared for closing costs, home inspection fees, and other upfront expenses, you’ll feel more confident and financially ready to take that big step.
At the end of the day, education is key. The more you know about the home buying process, the better decisions you'll make—and the smoother your path to homeownership will be.
Need help navigating the home buying process? Let’s chat! We’re here to guide first-time buyers through every step—from pre-approval to closing day.
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