8 Hidden Costs of Buying a Home That Real Estate Pros Wish You Knew

We all know the journey to buying a home is an expensive one, but between the costs of closing on an offer, inspections and repairs, and new bills after move-in, things tend to add up faster than expected.

Before you commit, real estate experts from around the country are here to reveal some of the most common hidden costs of buying a home, and help you figure out how much money you’ll actually need for this major life purchase.

Earnest Money

Once you save up a house deposit and have finally found the space of your dreams, you may think you’re good to go. Unfortunately, that isn’t the only amount you’ll need to have saved.

“As soon as your offer is accepted, you’ll need to deposit earnest money within three business days,” says broker Sunita Thaker. “This is typically 1% or 2% of the purchase price, and is held in escrow until closing.”

Earnest money shows you’re serious about moving forward with the process, and although it does goes toward your down payment, you can lose it if you back out of the purchase without giving a solid reason.

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Closing Costs

Closing a deal and locking in the purchase of your new home is an exciting time, but it can also be a surprisingly expensive one.

“I’m always surprised by the number of buyers who are unaware of closing costs, which are usually 2% to 5% of the purchase price,” says realtor Evan Harlow. “These include lender origination fees, appraisals, and recording fees or prepaid escrow for taxes and insurance.”

Home Inspections

After putting in an offer, buyers typically have a period of 1 to 2 weeks to run home inspections. These can be overviews for whole home, or specific checks on elements like structure, water heaters, septic tanks, and potential pest infestations.

“An inspection alone might be $400 to $600, but fixing a few minor problems, such as outdated electrical panels or foundation cracks, will easily cost you between $2,000 and $8,000,” Harlow says.

Drainage and Grading Issues

If you built a home from scratch today, there are building codes that require sloping the land to regulate water flow. But some older homes are built on land without drainage, and this can cause serious and expensive damage to your home’s foundation if left unchecked.

“Drainage and grading problems allow water to seep down, and fixing them can set you back between $3,000 to $10,000,” Harlow says.

Utility Bill Changes

Although increases in utility bills are to be expected—especially if you’re buying a home to upsize—you might also be faced with costs for changing addresses, terminating contracts, or establishing new accounts.

“There may be transfer or setup fees for internet, gas, electricity, water, and garbage,” Thaker says. “If you were renting, some of these fees may have been covered for you, but homeowners have to pay for all of these.”

Insulation Upgrades

During your first winter after moving in, watch out for rooms that are colder than others, heat escaping, and unexpectedly high heating bills. If things are feeling chilly instead of cozy, real estate developer Jake Greenhouse recommends having the insulation checked.

“Many older homes have insufficient or outdated insulation, which can lead to drafts, inconsistent indoor temperatures, and higher utility costs,” he says. “Upgrading insulation, typically costing $2 to $3 per square foot, can significantly enhance energy efficiency and comfort.”

Window, Door, and Roof Repairs

Other common culprits behind high heating bills are drafty windows and doors, and damaged rooftops in need of repairing; these often fly under the radar until you’re actually moved in. Weatherproofing can be another hidden cost.

“Repairing and replacing [windows, doors, and rooftops] can range from $5,000 to $30,000,” Greenhouse says.

Homeowners Association Fees

Depending on the neighborhood, your newly purchased home may fall within a homeowners association (HOA). They have a reputation for having strict rules about yard maintenance and exterior decor, and also come with additional expenses.

“Buyers may have monthly, quarterly, or annual fees to help manage shared areas, neighborhood parks, walking trails, and community events,” Thaker says. “These average $200 to $300 per month, but can be over $500 in certain areas.”