10 Costs of Homeownership (that you haven’t considered)

First of all, congrats! If you are reading this, then you are probably in the market for a home. I was in your same place earlier this year. Looking for resources in order to assist me on my journey to homeownership.

I was looking for a checklist, you know, something to tell me how to prepare. That’s why I created these 5 steps to prepare for your first home purchase.

After I knew I was ready to buy a home, I wanted something else that showed me all the fees and costs associated with homeownership compared to apartment dwelling.  I couldn’t find anything anywhere that detailed all of the costs of homeownership.  That’s why I created this list.

10 Costs of Home Ownership(That You Haven't Considered) (1)

If you are like me then you have been on Zillow and other similar sites looking at the prices of homes, and the associated monthly payments. The amounts shown on Zillow make it seem like you can afford a lot more than you may have previously thought. I am here to let you know that Zillow and other similar sites don’t cover a lot of the major costs associated with homeownership.

  • The estimates include paying 20% for your down payment (which I encourage but may not be feasible for everyone).
  • The estimates include the lowest interest rate possible; and therefore, perfect credit on your part and a sizable down payment.

In addition, there are other things to consider when purchasing your first home. Check out these 10 hidden (and some not so hidden) costs of homeownership!


Earnest Money

Earnest money is put down when you are interested in buying a home. It lets the owner know that you are serious about the purchase. Earnest money could be as little as $500-1000 or as much as 2-3% of the offer amount. When you find a home that you are interested in and ready to make an offer, be prepared to put down your earnest money soon after.

Personally, my earnest money was $1000.  I ended up writing a check for the earnest money 2 days after I told my realtor that I was ready to make an offer.


House Inspection

A house inspection happens after you have put an offer on the home and paid your earnest money.  Home inspections evaluate the physical condition including its construction, safety, and mechanical systems.  Although not required under most circumstances, home inspections are strongly recommended.  A home inspection can alert you to serious or even minor issues which may also give you bargaining power when determining the final home price.

On average, a home inspection is $400.  For my home inspection in March, I paid about $325.  There was a minor issue with one of the windows which I required the sellers fix prior to the closing.



PMI is private mortgage insurance.  When getting a conventional loan, PMI is required if your down payment is less than 20% of the appraised or sale price of the home.  PMI can go away once you have 20% equity in your home.

Similarly, MI or mortgage insurance is required for borrowers who obtain FHA loans and put a down payment down of less than 20%.  Unfortunately, mortgage insurance is tied to you for the remainder of the loan period (unless you refinance your home loan at a later date).


Closing Costs

Closing costs are fees paid at the closing of a real estate transaction.  Examples of closing costs include mortgage application fees, home warranties, title service costs and more.  Typically, home buyers will pay between 2-5% of the purchase price of their home in closing costs.  According to a recent survey, homebuyers pay about $3700 in closing costs. The good news is that most times the seller of the home will pay the closing costs on behalf of the buyer.


Homeowners Insurance

Homeowners insurance is a form of property insurance to protect an individual’s home against damages to the house itself, or to possessions to the home.  It typically also provides liability coverage against accidents in the home or the property.  Although homeowners insurance is not required, if you received a loan, the lender may require homeowners insurance.


HOA Fees

HOA (or homeowners association fees) are required by many housing editions and condominium associations.  Depending on the association, the HOA fees may very as well as what is included with the fees.  For example, for condos the HOA fees typically cover the entire outside of the dwelling from lawn to snow care as well as exterior painting and roof maintenance.

For certain condominium associates, the HOA fees can be as high as $200-400 a month whereas certain housing editions may be as low as $100 per month.  My HOA fees are currently $75 per quarter.


Lawn care/Snow Removal

After apartment dwelling for so long, I became accustomed to having someone else mow the grass and shovel the snow.  Unless you opt for condominium dwelling, lawn care and snow removal becomes your responsibility.  Ultimately, you can hire someone to take care of the lawn care or snow removal or you can take care of it yourself.  In an effort to be financially fit, I have decided cut my own lawn and shovel my own grass.

Although it did require an investment into the proper tools, I know it will pay for itself after a season or two.

Related: 10 Items you Should Slash from Your Budget


Increased Bills

Is the home you’re scoping out larger than your current residence? Is it standalone versus being in an enclosed surroundings? Were you paying for things like water, sewer, and trash? All those additional bills need to be considered when purchasing a home.

My home is only a few hundred square feet larger than my previous apartment; however, I now have a host of additional bills.  For example, I now have a monthly security alarm bill.

Related: 6 Bills you Need to Negotiate


Other Incidentals

Renting an apartment or home from someone else can be a sweet deal. If the air conditioning malfunctions or there’s a bug infestation, you can call your landlord to take care of it. It’s typically timely and there is no out of pocket cost to you.

Homeownership is drastically different in this respect. If something breaks, then it is completely on you to get it repaired. Although you may have a home warranty to lower some of the costs, it still is an additional bill.

That is why it’s so imperative to have a fully funded emergency fund outside of your downpayment.  You want to be prepared to financially handle emergencies as they come up.

Related: Steps to Starting an Emergency Fund


Opportunity Cost

Ultimately, the biggest thing to consider is the opportunity cost of buying. That house is yours until it’s sold. That comes with less flexibility than renting.

For example, say you land your dream job across the country. While renting, you can just tell your landlord and pay a fee to break your lease. When you own a property, you have to find a renter or sell the property.

  • With a renter, you want to ensure that they are reliable to pay the rent on time. If not, you are stuck with that mortgage payment since your name is actually on the property.
  • In order to sell the property, you have to ensure it’s in good condition as well as find a qualified buyer. Although you can find a real estate agent to assist, that comes at an additional price. Typically, selling your home can cost 6% of the selling price – 3% to your broker and 3% to the buyer’s broker.

It’s so important to outline the opportunity cost because many first time home buyers assume they’ll be able to sell their property right away for a large gain. However, that’s not always the case.


Considering becoming a homeowner? Make sure you read these 10 costs of homeownership to make sure you are financially ready!


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For the homeowners reading this, are there any costs of homeownership that I may have missed that you’d like to add?

*Part of Financially Savvy Saturdays on brokeGIRLrich and, Disease Called Debt*


  1. My worst unexpected cost was a collapsed sewer drain out. It’s obviously not cheap fixing a pipe that is 15-20 feet underground…Thankfully I found a good plumber (after a terrible company tried to get me to pay twice as much as it should have cost) and he talked to the city. There was an illegal repair done 4 years ago and that contractor fixed it at no cost to me. That was a lucky break but we could have easily been $7k in the hole from it.

  2. I am currently trying to decide whether to sell my home or rent it out because I will be moving in the next 6-9 months. There are repairs that need to happen either way. The whole process is stressing me out and making me wish I never bought a home. I think that I am a renter at heart. All of the homeownership expenses you list are very real and not everyone is cut out for it. This is a great post for current first time home buyers to read.

    1. I understand where you are coming from Beth. I bought my house earlier this year and alot more has come with it than I expected. I hope to rent my house out though when it is time to move.

  3. Oh how I wish I knew this when we bought our 1st house. We had no clue all the expenses it took to buy a house and then to maintain it.

  4. I wish I knew about things like lawn care. I got my first house at 18 and loved cutting grass. Now that I am 40… yeah… not touching that. I do not have a green thumb. My oldest cuts the grass, but he hates it too, so I wish I had figured in landscaping or something.

  5. This is great information. I am considering buying a house and I didn’t know half of the information your wrote about.
    Thank you!

  6. I’d forgot about a lot of these (we bought our home back in 2010), but I can’t stress it enough to have more than a little bit of money off to the side because home ownership can be a nightmare without a sufficient emergency fund.

  7. Those incidentals are real. I want to save for that, bc it seems like as soon as you move the washer and dryer will go out. Good list,.. there was something else, oh, 20%- geesh!

  8. I’m over being a home owner. I’ve been in my home for 16 years and like Eva said, it was an exciting opportunity but now it’s like ugh… lol… If it was just me, I would be a renter and let someone else have the headache. I would be bless to say that I was once a home owner but I’m tired of those responsibilities.

  9. wow that’s a whole lot.. lol I’m still renting from my brother, but I agree there are a lot of unexpected expenses. He’s had the house for 10 years (since he was 21) and it’s been a learning and growing experience. Not sure if I will go the homeowner route since it’s just me. I’ll see what the future holds.

  10. I have actually thought of the majority of those costs while looking at places to purchase. It is amazing how much needs to be considered.

  11. I know that there is a ton of responsibly that comes with owning a home, my parents have owned their home for 20 years. I think its all worth it though in the end especially when you have a family. Growing up in a home is so much better than growing up in an apartment and I can’t wait to be able to give that luxury to my own children!

  12. I am not a home owner but these are great tips that I will have to take into consideration when purchasing a home.

  13. Thanks for this great post – I found your blog via the #FinanciallySavvySaturdays link party.
    Actually this is a topic I was just discussing this morning at https://www.enrichmentality.com/whose-dream-home-is-this-anyway/- there are definitely lots of unexpected costs in buying and selling houses that people often neglect – and not just at the point of purchase, but in the years following, expenses that landlords normally deal with when you’re renting.
    Great list.

    1. Thanks for stopping my Sarah! You have a great point. I mainly mentioned expenses when you are initially buying a home but there can be alot of other expenses down the road.

  14. Interesting to read these hidden costs! We also have some of these hidden costs here in the UK (not Earnest money or Inspection fees though but other legal fees). I think it’s swings and roundabouts. Why you buy a home, you’re acquiring an asset (providing you eventually pay off the associated mortgage). When you rent, it’s an ongoing cost for the forseeable future. There are definitely more costs with buying a home that you have to think about in advance though.

  15. Great list! I would just add real estate taxes as the big one. Whether you pay them monthly through escrow or pay them quarterly directly to your township, paying real estate taxes can take a huge bite out of your finances. Other incidentals can also be quite high. When I purchased my current condo, most of the appliances and the HVAC were 20 years old, and I knew they’d all need to be replaced soon so I accounted for that in my offer and in my budget.

    1. Thanks for mentioning real estate taxes, Gary! That is a big costs that first time homebuyers should consider.

  16. The other thing to realize is that many of those “other” costs will increase over time, so when (if) you are trying to squeeze that home into your budget, realize that unless your income goes up, those other costs will hurt. Our house, which cost about twice as much as our first house, is paid off now. The funny thing is, the taxes and insurance on it cost more than the mortagage, taxes and insurance cost on that first house 25 years ago.

  17. I’ve never owned a home, and I didn’t know about some of these things. I will definitely keep all of this in mind for the future. Thanks for the tips!

  18. Definitely not ready to buy a home myself. My husband is gone for work most of the time and I am NOT going to shovel snow and cut grass all the time. It’s just not happening. Lol

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