How much cash do you really need to buy an entry-level home?

Well, it depends. But for the sake of keeping this geared to an entry-level purchase, we are going to go with bare minimums. I consider entry level up to about $450,000.

Depending on what type of loan you are getting and the deal that you have negotiated on your purchase is really going to dictate the amount of cash you can expect to need. 

But for the sake of this blog, we are going to assume that you qualify for one of the zero down programs and do not have to come in with a down payment.

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Out of Pocket Expenses

Typical expenses that are going to come out of pocket are. And mind you these are subject to my area but in our current market, you can expect these type of numbers.

Great Representation from me:  Always negotiable and ways to put it into your purchase.  So not necessarily cash out of pocket.  

Earnest Money:

Usually ranging about 1-2% of sales price.  But I have seen lower around $500 to $1000.  Due within about 3 days of us making an offer so be sure to have it on hand prior to writing an offer. 

Depending on the loan you are getting you could see this back at closing. Some of the Rural Development loans, and Idaho Housing for sure.  If you are financing any loan that you are bringing in a down payment this money will be applied to that at closing time. 

Home Inspection Fees

If you are choosing to do a home inspection (really recommend it if you are not very flush with cash). Hate to have you buy something that is going to be a money pit. That is a recipe for disaster. Home Inspection usually runs around $500-800. Depending on the size of the home.

This is usually due and has to be paid for at the time of service and that is usually within 10 days of an accepted offer or less.

So you’re going to want this on hand prior to making an offer.

This is totally your expense.  You will own this home inspection even if the house is so horrible you decide you don’t want it.

Appraisal Fees

Some lenders make you pay for your appraisal out of pocket some don’t they will wrap it into your mortgage. This is a question to have settled prior to making an offer on a home. I am seeing them come in on closing statements lately around $800-1200.  Be sure to check out our Finance page for a great lender.  

Closing costs Expense

Most entry-level home buyers wrap this expense into the offer and request the seller to pay them. Usually, this fee will get added to the cost of the home. Even though the seller “pays” them that is a technicality and usually gets wrapped into the price of the home.

These fees pay for your loan and the title expense fees.  Typically run about 3% of the sales price if you are estimating them to pay out of pocket.  Your offer is always stronger if you can pay them out of pocket but I have seen this go both ways many times.  As we go into a slower market this option will probably start getting a lot more use.  

An example of that would be home is selling for 200k and you want to have your seller pay closing costs very likely you would end up paying $212k for the property.  And like anything its negotiable but I am trying to keep it simple so you understand the process of what is actually happening.  

As you can see with the cost of rentals right now you are very close to getting into a home for the same amount of money.  

And the good thing is that its yours and the rent never goes up again.  

Are you ready to get started? 

You can set up your home search below and contact me to guide you in the right direction to get you started on the path of homeownership.  And remember this is a process bring your questions.  

Additional Reading:

How to Buy a Home

Idaho Agency:  Who is working for you

Where your down payment comes from matters