The Costs of Buying a Home
Of all the numerous details that go into buying a home, financing and associated fees may feel like one of the most daunting aspects. From understanding upfront costs to the long-term financial commitment, and even some hidden costs of buying a new home, it’s crucial to have an understanding of all aspects of financing a home purchase to make informed decisions. Read on to better understand what to expect before, and after, you sign your name on the dotted line!
Upfront Costs of Buying a Home
Before you fall in love with your dream home, it’s integral to understand your finances and what costs are associated with buying a home. Once you begin your home-buying journey, things can move quickly, so having everything in order is essential. Top of mind is cash on hand. How much do you have? Is it enough to cover the upfront costs of purchasing a home? And if it isn’t, do you have the resources to secure it? If you don’t, you may look into utilizing equity from your existing home, exploring home buyer rebates, or exploring various financing programs with mortgage lenders. Below are some standard costs of buying a new-build home that are helpful to familiarize yourself with.
Down Payment
Depending on the Holt Homes community that you’re looking to purchase in, and a variety of other specifications for each home such as the floor plan, lot or homesite, and upgrades, a new-build Holt Home is typically priced starting in the $400,000 range and can reach as high as $999,000. When financing your purchase using a conventional home loan, the typical down payment is 20% of the sale price. Other financing options are worth exploring that may allow a smaller down payment. To understand all of the options available to you, it’s best to consult our preferred lender. Be sure to ask about buyer assistance programs!
Earnest Money Deposit
Also known as a “good faith deposit,” for re-sale homes, earnest money is a sum of money that a buyer offers a seller to demonstrate that they are serious about the home purchase. Typically, 1- 3% of the total cost of the home, earnest money is shared when making an offer to the seller. If the seller accepts the offer, the earnest money is held in an escrow account until the transaction is complete. At that time the earnest money is applied to the down payment or closing costs. Should the deal fall through, and assuming you have the correct contingencies in place, the earnest money is usually returned to the buyer. For new construction homes, the earnest money amount is predetermined for each community and is released to the builder upon receipt of the deposit. Please note that earnest money is non-refundable.
Closing Costs
Typically, closing costs represent about 2% - 5% of the total cost of purchasing a home. These average costs may include the following:
- Home Appraisal Fee ($500-$1000+) This is used to ensure that the listed price is in line with market value
- Real Estate Attorney Fee ($400+) This fee pays an attorney to review closing documents
- Underwriting Fee ($300-$700) A charge to cover the cost of reviewing and approving your mortgage application
- Processing Fee ($300-$900) This covers the cost of document gathering and verification
- Loan Origination Fee (0-1% of the loan amount) This fee is charged by the lender for their service in processing the loan
- Title Search, Title Report and Title Insurance ($300-$2500+) This ensures there are no liens on the property and protects against ownership disputes
- Lender’s Title Insurance ($300-$1500+) This fee protects the lender from title disputes
- Escrow Fee ($350-$1000+) A fee paid to the title company or escrow account that covers the cost of handling funds and documents
- Recording Fee ($20-$250) This covers county fees to record a new mortgage
- Prepaid Taxes & Insurance ($1000-$4500+) This fee covers property taxes and insurance for the first months of homeownership
- Realtor Commission (5%-6%) Covered by the seller, this fee impacts the overall home sale
Closing costs are typically paid out of pocket in cash and cannot usually be included in your home loan. Your lender can help you understand what to expect and how best to prepare for these expenses.
Ongoing Costs of Homeownership
Once the upfront and closing costs are taken care of and you’re the proud owner of your new home, there are ongoing costs associated with ownership. The most obvious is your monthly mortgage, but there are other associated costs to be aware of.
Mortgage Payments
The amount that you pay in your monthly mortgage payment is based on four factors, and commonly referred to as PITI: principal, interest, taxes, and insurance. The total sum of your monthly payments may fluctuate based on the valuation of your property and the remaining balance on your loan. The two primary costs that your mortgage payment covers are:
- The principal This is the amount of your loan that you are paying down. In the early years of home ownership, a smaller amount of your payment goes toward the principal. As you pay down your loan, more of your monthly payment is applied to the principal.
- Interest This is the cost associated with borrowing money to purchase a home and the amount that you pay is based on the interest rate, loan balance, and loan term.
Homeowners Insurance
This insurance policy covers property damage to your home or belongings, the legal liability you hold if someone is injured on your property, and living expenses associated with a natural disaster should your home become uninhabitable. The average annual cost for Oregon and Washington State is approximately $1225, but the final cost depends on an array of factors.
Property Taxes
Property taxes are calculated using the county-assessed value of the home, which may differ from the fair market value. This assessed value is multiplied by the combined tax rates of all applicable taxing districts, along with any additional assessments. The revenue from this tax is applied toward services that benefit the community, such as improved roads, emergency services, and schools.
Additional Costs for New-Build Homes
Beyond the standard array of expenses associated with homeownership, there are a few other instances to be aware of that may impact your financial assessment as you’re considering your options.
Personalization & Upgrades
As you embark on your home-buying journey with Holt Homes, you may find opportunities to customize and upgrade your home which will increase costs. With transparent pricing on all upgrades, you can rest easy knowing that your Holt Homes purchase won’t come with surprise costs on closing day. The ability to personalize your new-build home to your unique preferences can be more advantageous than renovating resale homes.
HOA Fees
An HOA fee, AKA a homeowners association fee, is used to maintain and improve common areas in planned communities like a pool or gym. All Holt Homes communities have an HOA, and that monthly fee should be included in the assessment of your finances.
Inspection & Warranty Costs
Holt Homes is proud to include a Builder Backed 2-10 Home Warranty with all new-build homes. This warranty covers defects large and small from finishes and flooring, to roofs and the foundation. It’s a little extra protection that should help you sleep soundly. Be sure to ask about this warranty, other warranties worth considering, and any associated costs as you explore your options.
Budgeting for the Long-Term
In addition to the costs and fees associated with purchasing your home, and the monthly expenses reviewed above, it’s essential to put aside funds to cover the costs of maintenance. From landscaping, and repairs to normal wear and tear and in the unfortunate case of emergencies this financial resource is essential. Having an annual savings plan of 1-4% of your home’s total value is a good place to start. Placing these savings in a High Yield Savings account can also help accrue a little extra on your balance while it sits and waits to be used. And don’t forget utilities! Water, gas and electricity should also be considered as you’re putting together your financial plan.
Conclusion
From upfront and closing costs, mortgage payments and fees, personalization and upgrades, and long-term financial planning, there’s a lot to consider when purchasing a new-build home. You can rest a little easier when you partner with a trusted builder like Holt Homes, knowing you’ll receive exceptional transparency and support every step of the way.
Take the first step toward your new home by reaching out to Holt Homes today. We look forward to discussing your budget and reviewing home and community options that are right for you.
And, of course, we’d love to talk to you about your next home: a Holt Home! Contact us for more information and to schedule a visit.
*All selections subject to change depending on availability
Posted: Apr 16. 2025