What fees do you need to pay when buying a home?

Buying a new home? Find out what fees you’ll need to pay.

Buying a home is one of the most significant investments of your life. While you will probably be aware of the primary fees you have to pay to secure the property you want, there are plenty of other fees you may be unaware of. Those fees can soon stack up, so it is important you have a good grasp of them.

Down payment and mortgage

The biggest one-off fee you will encounter when buying a home is the down payment. While some types of loans, such as VA and USDA loans, do not require you to put any money down, the vast majority of homebuyers with mortgages need to pay at least 3% of the property price. Enter your address and location into the USDA property eligibility map to know if you are eligible.

For example, if you purchase a property at $300,000, you would have to put down at least $9,000. Of course, in addition to the down payment, you need to pay off your mortgage loan monthly. The mortgage rates you are expected to pay will be dependent on your personal circumstances.

While outside factors like inflation and economic growth can affect mortgage interest rates, it is your personal financial health that will make the most difference in the amount you end up paying.

However, many homebuyers do not take the time to shop around for the best rates. So, get to know mortgage loan rates and compare different loan providers to ensure you get the best rate.

Private mortgage insurance

Depending on the type of mortgage loan you take out, you could be required to pay private mortgage insurance. It is required for all USDA and FHA loans and could be necessary if you are putting down less than 20% on a conventional mortgage loan. 

Real estate agent commissions

Property sellers typically pay real estate agent fees, but sometimes the fees can come out of the buyer’s pocket. So, ensure you know whether you have a commission charge to cover before deciding to go with a specific real estate agent. 

Title services fees

One type of fee you may not be aware of is the one related to the title of your new home. You will usually have to pay charges for things like the title search, title settlement, and title insurance. 

Survey and appraisal fees

If a new survey of the land you are purchasing needs to be conducted in order to determine things like the precise boundaries of the property, you will have to pay the fee.

Survey fees typically cost around $500. You will usually need an appraisal as well, which means you need to pay an upfront appraisal fee to your mortgage lender. Appraisal fees are typically around $300 or $400.

Other fees you may encounter

The above list of fees demonstrates the most common costs you could encounter when buying a home. But there are plenty of other fees you could encounter depending on the nature of the exact property you purchase. Other fees you may come across could include:

  • Flood-related fees. If you buy a home in a flood-prone area, you could have to pay for things like flood determination, certification, and monitoring.
  • Pest or mould inspection fees. If you are moving into an older property, you could need inspections for things like mould and pests.
  • HOA fees. If your home is located within an HOA, you could have various costs to pay, including dues, processing fees, and transfer fees.