How much money do you need to buy a house?

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When buying a house, most buyers focus on saving for a down payment. But that’s only one part of the cash you may need upfront. Closing costs, prepaid expenses, moving costs, and early homeownership expenses can all add to the total.

So how much money do you need to buy a house? Many buyers need 3% – 20% of the purchase price for a down payment, plus another 3% – 6% for closing costs. On a $400,000 home, that typically means about $24,000 on the low end to $104,000 on the high end in upfront cash before factoring in moving costs, repairs, or cash reserves.

Key takeaways:

• Most buyers need 3% – 20% of the purchase price as a down payment, but you don't need 20% to get started. There are loan programs that require a lot less upfront.
• Beyond the down payment, plan for closing costs, prepaid expenses, moving costs, and cash reserves. Your total cash to close is often thousands more than the down payment alone.
• Your monthly housing payment includes more than your mortgage. Property taxes, homeowners insurance, and possibly mortgage insurance and HOA fees all affect what you can actually afford.

How much does it cost to buy a house in 2026?

The amount of money you need to buy a house is going to depend on a lot of factors: the home price, loan type, down payment amount, closing costs, and how much cash you need left over after closing.

Market conditions play a part in this number as well. Home buyers are still dealing with elevated home prices, mortgage rates high above the pandemic lows, and limited inventory in many markets.

Here's where the national market stands heading into mid-2026:

• Median home price: $398,771, based on Redfin U.S. housing market data
• Average interest rate: 6.47% for a 30-year fixed mortgage, per the Freddie Mac Primary Mortgage Market Survey^® for June 18, 2026
• Inventory level: Approximately 4 months of supply at current sales pace

On a $400,000 home, a 5% down payment is $20,000. Closing costs of 3% – 6% could add another $12,000 – $24,000, bringing the upfront total to about $32,000 – $44,000 before moving costs, prepaid expenses, repairs or reserves.

Here’s how the upfront cost can change based on the home price and down payment amount, using 3% for estimated closing costs:

Your location, lender, loan type, tax rate, insurance premium, and whether you receive seller concessions or down payment assistance will all affect how much it costs to buy a home.

What upfront costs should home buyers budget for?

As you begin your home search, it helps to understand the costs that can come due before or at closing.

Down payment

A down payment is the cash you put toward the purchase price of a home. It reduces the amount you borrow and affects your monthly payment, your interest rate, and whether you'll owe mortgage insurance.

Despite common belief, you don’t need to put 20% down to buy a house. A 20% down payment can help you avoid private mortgage insurance on a conventional loan, but many buyers use loan programs that allow much smaller down payments.

A down payment calculator can help you compare different options and see how each one affects your upfront costs and monthly payment.

Earnest money

An earnest money deposit shows the seller you're committed to the purchase after signing a purchase agreement. It can range from 1% – 10% of the home's purchase price and is submitted within a day or two after offer acceptance–though buyers in less competitive markets will likely put down closer to 1% – 2%.

On a $400,000 home, that could be anywhere from $4,000 – $12,000. This money is usually credited toward your down payment or closing costs, so it's not an extra cost if the sale goes through. It can, however, be lost if you back out of buying the home without a valid contingency.

Closing costs

Closing costs are the fees and expenses you pay to finalize your mortgage and complete the home purchase. They generally range from 3% – 6% of the purchase price.

On a $400,000 home, that means buyers might pay $12,000 – $24,000 in closing costs, depending on the lender, location and loan type.

Closing costs often include:

• Loan origination fees
• Appraisal fee
• Credit report fee
• Title search fees and title insurance
• Recording fees
• Mortgage origination fee
• Attorney fees, if required in your state
• Mortgage points, if you choose to buy down your rate
• Third-party fees (home warranty, HOA dues, insurance, etc.)

Closing costs vary by state, county and lender. In some cases, you can ask the seller to pay part of your closing costs through seller concessions, though sellers may be less likely to agree in a competitive market.

Prepaid costs

Prepaid costs are ongoing homeownership expenses paid upfront at closing. Unlike closing fees, they’re not one-time transaction costs. They’re early payments toward costs you’ll continue paying as a homeowner. Common prepaids include:

• Property taxes: Lenders may collect several months of taxes upfront and hold the money in escrow until tax bills are due.
• Homeowners insurance: Your first year's premium is usually due at or before closing, plus a few months of reserves
• Prepaid interest: If you close midmonth, you may prepay interest from your closing date through the end of that month.

Home inspection and appraisal fees

A home inspection isn't required by most lenders, but it's one of the most important steps you can take as a buyer to understand the home’s condition before closing. A general home inspection costs, on average, $200 – $500. Depending on the home, you may also want specialty inspections for pests, radon, sewer lines, mold, or structural issues, each adding to the total. These are paid upfront during the inspection period.

An appraisal is usually required by your lender to verify the home's market value supports the loan amount. Appraisals typically cost $300 – $1,000 and are usually paid for upfront, after you’ve applied for your loan, but may sometimes be rolled into closing costs.

Moving costs

Moving costs can vary based on how far you’re moving, how much you own and whether you hire professional movers.

Local moves on average cost $880 – $2,560, while the national average runs around $1,700. Long-distance moves can cost much more. You may also need to budget for packing supplies, storage, cleaning, utility setup and time off work.

Cash reserves

Cash reserves are funds left over after closing. They can help cover unexpected repairs, a temporary income disruption, or early homeownership costs.

Some loan programs or lenders require verified reserves as part of underwriting. Even when they’re not required, it’s highly recommended for buyers to keep 3 – 6 months of housing expenses in savings after closing.

Example: Cash needed to buy a $400,000 home

Here's what a buyer might bring to closing on a $400,000 home with 5% down using a conventional loan (the actual cash to close could be higher or lower based on your personal circumstances):

What monthly costs should buyers plan for?

The money you need to buy a house doesn’t stop at closing; you'll also need to stay on top of long-term ownership expenses. Your monthly housing payment includes more than principal and interest.

Mortgage payments

Your monthly mortgage payment includes principal (the amount you borrowed) and interest (the cost of borrowing)/ On a fixed-rate loan, the principal and interest payment stays the same each month, but the share going toward principal grows over time.

At a 6.47% rate on a $400,000 home with 5% down, the principal and interest payment alone is around $2,400 per month. Taxes, insurance and mortgage insurance can bring the total monthly housing cost closer to $3,000 or more.

To help estimate your monthly mortgage payment amount, use the Rocket Mortgage mortgage calculator.

Property taxes

Property taxes vary widely by location. The national average is roughly 1% of home value per year, but rates range from well under 1% in some states to over 2% in parts of the country.

On a $400,000 home, a 1% tax rate would equal about $4,000 per year, or roughly $333 per month. Some lenders collect taxes monthly as part of your payment and hold them in an escrow account until they’re due.

Homeowners insurance

Homeowners insurance protects your property and belongings against certain covered losses, such as fire, theft or storm damage. Your lender will require proof of insurance before closing.

 Premiums vary by location, coverage level, home condition, and local risk factors. Nationally, annual premiums average around $1,000 to several thousand dollars a year. Many lenders collect homeowners insurance through escrow as part of the monthly mortgage payment.

Mortgage insurance

Depending on your loan type and down payment, mortgage insurance might be required.

On conventional loans, private mortgage insurance (PMI) is required when you put less than 20% down. PMI often costs 0.2% – 2% of the loan amount per year and is paid monthly. Once you’ve reached 20% equity in the home, you can request PMI removal.

FHA loans require mortgage insurance regardless of the down payment amount, including an upfront mortgage insurance premium (MIP) and an ongoing monthly premium. FHA mortgage insurance stays in place for the life of the loan if you put less than 10% down.

VA and USDA loans don't require monthly mortgage insurance, but they may include funding or guarantee fees.

HOA fees

If the home is in a condo building, planned community or neighborhood with a homeowners association, you may pay HOA fees. These fees can range from under $100 to several hundred dollars per month.

HOA fees are separate from principal, interest, taxes and insurance, but lenders still consider them when determining how much house you can afford.

Utilities and maintenance

Utilities and maintenance aren’t usually included in your mortgage payment, but they still affect your monthly budget. Plan for electricity, gas, water, sewer, trash, and internet. As a homeowner, you’re also responsible for repairs when something breaks.

There’s no one-size-fits-all answer for how much you should spend on your first home. But, a good rule here is to avoid spending more than 28% of your gross income on your monthly mortgage payment. Based on this percentage of income, you can determine the home price you can afford, and ultimately how much cash you’ll need to buy a house.

How to reduce how much money you need to buy a house

If your savings aren’t where you want them to be, there are ways to reduce the amount of cash you need upfront to buy a home.

Choose a low-down-payment loan

The right loan program can significantly reduce your upfront cash requirement. Conventional loans may allow as little as 3% down for first-time buyers. FHA loans require 3.5% down with a qualifying credit score. VA and USDA loans may allow 0% down for eligible borrowers.

A lower down payment can make it easier to buy sooner, but it may increase your monthly payment or mortgage insurance costs. Compare the total cost of each loan option – including funding fees, mortgage insurance, and rate differences – before deciding.

Look into down payment assistance

Many state and local programs offer grants, forgivable loans, deferred-payment loans or low-interest second mortgages to help buyers cover down payments and closing costs.

Eligibility requirements vary by program, but could include income limits, purchase price limits, locations rules, or a home buyer education course. Your lender might be able to help find programs available in your area.

Ask about seller-paid closing costs

In some negotiations, buyers can ask the seller to cover part of their closing costs. This can reduce your cash to close without lowering the purchase price.

Conventional loans allow seller concessions of 3% – 9%, depending on your down payment. FHA and VA loans also allow seller contributions up to certain limits. Sellers may be more open to concessions when the market is less competitive.

Ask about lender credits

A lender credit can reduce your upfront closing costs in exchange for a higher interest rate. This could help if you need to use less cash at closing, but it can cost more over time through a higher monthly payment.

This option may make sense for some buyers, especially if they don’t plan to keep the mortgage for a long time. Since this option can cost more over the life of the loan, look closely at the short-term savings with the long-term cost before choosing it.

Use eligible gift funds

Some loan programs allow buyers to use gift funds from family members or other approved sources. The money usually needs to be documented with a gift letter showing that it doesn’t have to be repaid.

Gift fund rules vary by loan type and lender, so ask your lender what documentation is required before moving money between accounts.

How to prepare financially to buy a house

Once you understand the main costs of buying a home, the next step is to start building a realistic plan for what you can afford. A common guideline is the 30% rule, which suggests keeping your monthly housing payment at or below 30% of your monthly income.

But with home prices still high in many markets, some buyers are stretching beyond that ratio–which makes it even more important to look at your debt, savings, potential closing costs, and the cash you’ll have remaining before making an offer.

Build your savings target

Start by adding up all the major costs: down payment, closing costs, prepaid expenses, any moving costs, and what you want to have left over. Once you have that target number, work backward to determine your monthly savings goal.

Keep your home buying fund in a separate savings account to make it easier to track your progress and avoid spending the money somewhere else. Every dollar you can put toward the home purchase helps the interest you’ll pay over the life of your loan,

Check your credit and debt-to-income ratio

Your credit score affects both your ability to qualify for a mortgage and the rate you'll receive. Before applying, review your credit report and check for errors – even small inaccuracies can affect your score. Paying down debt, making on-time payments, and avoiding new credit inquiries in the 6 months before you apply can all help your credit score.

Then, calculate your debt-to-income ratio (DTI). Add up all your monthly debt payments, including student loans, car payments, and credit cards, and divide by your gross monthly income. Lenders will use your DTI to decide how much money they’re willing to lend.

Get preapproved

A mortgage preapproval is based on a review of your actual income, assets, credit, and debts. It gives you a better idea of how much you can borrow and shows sellers that you're a serious buyer. Getting preapproved before you start home shopping can help you set a realistic price range and make a stronger offer when you find the right home.

Compare preapprovals from at least two or three lenders, using the provided Loan Estimates. Rates, fees, and terms will vary between lenders, and even a small difference in your rate can save you a lot of money over the life of the loan.

FAQ

Is $10,000 enough to buy a home?

In most markets, $10,000 alone isn't enough to cover the full cost of buying a home. On a $200,000 home with 3% down, your down payment would be $6,000, but you'd still need to cover closing costs, prepaid expenses, and reserves. Down payment assistance programs might be able to bridge the gap for buyers who qualify.

Is $20,000 enough to buy a home?

It depends on the home's price and your loan program. For homes in the $200,000 – $300,000 range, $20,000 may be workable as a combined down payment and closing cost fund, especially with down payment assistance or seller-paid closing costs. On a $400,000 home, $20,000 covers the 5% down payment but would leave little left for closing costs and reserves.

Can I buy a house with no money down?

Some buyers can buy a house with no down payment through a VA loan or USDA loan. Both programs have eligibility requirements, and not every property will qualify. Even with a no-down-payment loan, buyers may still need money for closing costs, prepaid expenses, moving costs and reserves.

Do I need 20% down to buy a house?

You don’t need 20% down to buy a house. Some conventional loans allow down payments as low as 3%, FHA loans allow 3.5% down for eligible borrowers, and VA and USDA loans might not require any down payment. However, putting less than 20% down on a conventional loan usually means paying PMI, which can increase your monthly payment.

Are closing costs included in the down payment?

Closing costs and the down payment are separate. The down payment goes toward the home’s purchase price, while closing costs cover fees and services needed to finalize the mortgage and transfer ownership. Because both are typically due at closing, buyers should budget for them together when estimating how much cash they’ll need to buy a home.

What is cash to close?

Cash to close is the total amount you need to bring to closing. It may include your down payment, closing costs, prepaid expenses and other required funds, minus any deposits or credits already applied. Your lender will list this amount on your Closing Disclosure before closing, so you know the final number before you sign.

What is an escrow account, and why do I need one?

An escrow account is a holding account managed by your lender. Each month, part of your mortgage payment goes into the account to cover your property taxes and homeowners insurance. Your lender pays those bills when they come due. Most lenders require escrow for buyers who put less than 20% down, and it's a useful tool for making sure those expenses are always covered on time.

The bottom line: How much you need to buy a house is more than the down payment

Buying a home involves more costs than a lot of first-time buyers expect, but knowing what to plan for puts you in a much stronger position in the long run. The amount you'll need depends on your purchase price, loan type, location, closing costs, and how much you want to keep in reserve.

For a $400,000 home, a buyer putting 5% down could need about $32,000 for the down payment and estimated closing costs alone. Once prepaid expenses, moving costs and reserves are added, the total can be even higher.

As part of getting your finances in order, you can take these steps so you’ll be ready to purchase your first home. Before you start house hunting, use a home affordability calculator, compare loan options, and start the mortgage preapproval process so you can see your full estimated cash to close and monthly payment.

¹Rocket Mortgage is not acting on behalf of FHA or HUD.

²Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

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