How Much Do I Need to Buy a House?

No Money Down, but No Money in the Bank? Time to Save!

My biggest pet peeve is hearing or reading something like, "Do these 7 things to make generational wealth!" Then you read an entire book waiting to see these 7 things to make money, only to read about mindset.

Could be my military background, or maybe the fact that I have four children. Either way, give it to me straight or take a hike!

On that note, today's topic is...

"How Much Do I Need to Buy a House?" Here's the answer!

Whether you're using a VA or USDA loan and have NO Downpayment, or a Conventional loan with 20% down... those aren't the only funds you need to buy a house!

So... here's a list to get you started to see if you've got the cash to start looking!

Feel free to print this and use as a jump off point before you call an agent! *These numbers are estimates for North Carolina, not representative of any other state, and are only the average costs to anticipate in a home under $500,000. DD and Earnest Money could go beyond 10K in certain circumstances.

(The amounts provided are an average cost and could be more or less depending on the inspectors you use.)

✔️	Pre-Closing Funds Needed	Estimated Amount	Actual Amount	Notes
	Due Diligence	$0 - $10,000
	Earnest Money	$0 - $10,000
	Home Inspection	$400-$600
	WDI or Termite Inspection	$90
	Appraisal	$800
	Total Basic Pre-Closing Funds
	Additional Inspections if Needed
	Septic	$350
	Well	$350
	Radon	$350
	HVAC	$150
	Roof	$100-$250
	Plumbing	$100-$250
	Electric	$100-$250
	Total Addn'l Inspections
	Funds to Close
	Downpayment (loan type dependent)	0% - 20% of purchase price
	Closing Costs (dependent on lender, attorney and other professionals used in the process)	3%-5% of purchase price
	Additional?
	Total Funds to Close
	Funds to Move
	Moving Truck/Company
	Electric Company Start-Up	$75-$150
	Utilities Start-Up	$75-$150
	Internet Connection
	Trash Pick-Up
	Total Funds to Move
	Total to Buy a New House

If you made it to the green and are GOOD TO GO... Let's do it!

Why is Due Diligence and Earnest Money such a wide range?

(Due Diligence and Earnest Money deep dive will be in a separate blog post!)

Please explain!

Due Diligence

These are funds you give to a seller after they've accepted your offer and in exchange the seller takes their home off the market so no one else can view it or put an offer on it. You give them a time limit. Usually, 2-4 weeks. During this time is when you conduct all of your inspections and determine if you truly want to buy the home. If you walk away from the house for any reason during that time period, the seller keeps those funds. If you stay the course, then those funds come off the top of the purchase price.

The main question: how much do I offer in DD? That depends on how much you can afford to offer, and how much is really necessary. This is where a Realtor can help boil this down to the nitty-gritty. You might have $10K, but only need $500 for this particular deal!

Earnest Money

Earnest Money is similar. It's an amount of money that you're saying you'll also give the seller. However, they only receive these funds IF you walk away from the deal AFTER your Due Diligence period ends. If you walk away DURING your Due Diligence period, you will get any Earnest Money returned to you.

Same main question: and the same answer applies.

"But how do I know whether to offer Due Diligence, Earnest Money or both?" (This is a separate blog post where we'll really dig in on this!)

Both of these funds help sell the seller on your offer. Along with other factors like the purchase price you're offering to pay and how quickly you're willing to buy.

Why the Missing Numbers?

Only you can determine HOW you plan to move. Use a moving company? Rent a Van? Use your best friend's pick-up? So ultimately you'll need to do your research to determine how much it might cost you to move. $5000 for a moving company? Beer and Pizza for your work pals?

Similar with Internet and Trash pick-up. There are options with internet services, too many to list. So do your homework! Trash? Maybe you'll opt to bring it to the local dump yourself. Or have a local company pick it up. Again, something to look into!

What's the Bottom Line

1. Plan to have roughly $3000 in the bank as a safety net of funds for your inspections and appraisal. Might be more than you need, but that just means you can use the funds elsewhere!

2. How much you need in the bank to offer either Due Diligence or Earnest Money (or both), depends on

   1. Price point of homes you're looking at

   2. How long the property has been on the market

   3. Is the home a hot commodity for the area you're looking at

3. Get yourself a really good Agent that can guide you down a path for how to answer those questions above, knows what to look for in a house based on your loan type and home desires, and what you can afford!

4. And, find a really good lender that will offer the best loan conditions for your personal financial means!