Buying tips

Save for Closing Costs

Along with your down payment, you’ll also need to pay for closing costs. If you’re a first-time home buyer, you may be wondering how much it costs to close on a house. On average, closing costs are about 3–4% of the purchase price of your home.³ Your lender will give you a specific number so you know exactly what to bring on closing day. These fees pay for important steps in the home-buying process, including:

• Appraisal
• Home inspection
• Credit report
• Attorney
• Homeowner’s insurance

Let’s see how this plays out with our example of a $172,600 home. If you multiply $172,600 by the higher 4% closing cost average, you’ll find that you need $6,904 for closing costs. Now, let’s add that to your 20% down payment of $34,520. Together, the two equal $41,424, which is about what you’ll need to save to pay for the down payment and the closing costs on your first house.