WASHINGTON, DC — First-time buyers often build a budget around the down payment and the monthly mortgage payment, but those two numbers rarely cover the full price of owning a home. Several other costs can appear before the keys change hands, while others show up in bills that arrive every month after the move.
The biggest surprises can add up quickly. Freddie Mac says closing costs are usually 2% to 5% of the purchase price, which means a buyer of a $400,000 home could owe another $8,000 to $20,000 on top of the down payment. That range covers lender fees, an appraisal, title services, government charges and prepaid taxes or insurance.
What The Numbers Show
The numbers in this budgeting advice come from Freddie Mac, Ownwell and homebuyer education experts who work with new purchasers. Freddie Mac’s estimate gives buyers a way to plan for the cash needed at closing, while Ownwell’s March 2026 survey suggests that property taxes are another place where expectations can break down.
Ownwell said it surveyed 2,500 homeowners in March 2026 and found that 64% were surprised or shocked by their latest property tax bill. The company said about 76% reported that their taxes were higher than they had budgeted for. Colton Pace, Ownwell’s co-founder and CEO, said buyers often overlook that a listing’s tax figure may reflect the seller’s exemptions or an older assessed value.
Why Costs Change
Property taxes can rise after a sale because the home may be taxed at a new sale price, and a seller’s tax breaks may no longer apply. That means the amount a buyer sees on a listing or in an early escrow estimate may be lower than what the new owner will actually owe once the home changes hands. Buyers are being urged to check with the local tax office or their agent before making an offer.
Insurance can also climb in ways that are easy to miss at first. Ashley Harris, director of homebuyer education at Neighbors Bank, said homeowners insurance is often the biggest surprise. A quote can be higher than expected, renewal prices can rise, and a mortgage payment can increase if insurance is included in escrow. For homes with flood risk, buyers may also need separate flood coverage because standard homeowners policies usually exclude flooding.
What Buyers Should Check
Utilities and municipal services can also push a budget higher after a move from an apartment to a house. Nick Good, who operates The Good Home Team in North Texas, said larger single-family homes often mean higher electricity and water bills than renters are used to paying. That change can matter as much as the mortgage for households trying to figure out the true cost of a home.
Buyers can compare a Loan Estimate with the later Closing Disclosure to see how the closing charges change, and they can ask lenders how the property tax figure was calculated. They can also request an insurance quote for the specific address they want to buy and ask about flood risk. What remains unsettled is the exact bill each household will face, since local taxes, coverage and utilities depend on the property, the neighborhood and the lender’s estimates.
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