Upfront Costs When Purchasing a Home: What Buyers Should Budget For
Buying a home involves more than just the down payment. Many buyers focus on the purchase price and monthly mortgage payment but are surprised to learn there are several upfront costs that must be paid before and at closing.
Understanding these expenses in advance helps you prepare financially, avoid delays, and move through the transaction with confidence. Below is a detailed breakdown of the most common upfront costs when purchasing a home.
1. Earnest Money Deposit
An earnest money deposit is submitted shortly after your offer is accepted. It demonstrates to the seller that you are serious about moving forward.
Typically ranges from 1%–3% of the purchase price (varies by market).
Held in escrow.
Applied toward your down payment or closing costs at settlement.
While it’s not an “extra” cost, it is money you must have available early in the process.
Inspection Costs
2. General Home Inspection
A home inspection is one of the most important upfront investments you’ll make.
Typical cost: Varies based on size and location of the property.
Purpose: Evaluates the home’s structure, systems, and visible components, including:
Roof
Electrical
Plumbing
Heating and cooling systems
Foundation
Interior and exterior components
This inspection helps identify potential repairs or safety concerns before closing.
3. Specialized Inspections
Depending on the property type, additional inspections may be recommended. These are typically paid upfront during your inspection period.
Examples include:
Septic system inspection (for private systems)
Sewer line scope (for public sewer connections)
Radon testing
Water quality testing (for private wells)
Pest or wood-destroying insect inspection
Chimney inspection
Roof inspection
Costs vary depending on the service, but budgeting for these evaluations is important. Skipping them to save money can lead to significantly higher expenses later.
Appraisal Costs
4. Appraisal Fee
If you are obtaining a mortgage, your lender will require an appraisal.
What is an appraisal?
An appraisal is a professional, independent assessment of the home’s market value. The lender uses it to confirm that the property is worth the agreed-upon purchase price.
Who pays for it?
The buyer typically pays for the appraisal upfront as part of the loan process.
Mark Montross
Catamount Realty Group
85 Prim Road, Suite 202
Colchester, VT 05446
802-825-1353
Mark@CatamountRealtyGroup.com