Then the settlement statement lands in your inbox, and there's a second number you didn't budget for: closing costs.
On a typical American home purchase, these fees run somewhere between 2% and 6% of the loan amount.
On a $400,000 house, that's $8,000 to $24,000 due at signing.
There's the loan origination charge for processing your mortgage.
There's an appraisal fee, usually $500 to $700, to confirm the home is worth what you're paying.
There's title insurance, which protects the lender if someone later claims ownership of the property.
Add in a credit report pull, flood certification, recording fees at the county office, and prepaid property taxes and homeowners insurance that get parked in escrow.
Lenders are required to give you a Loan Estimate within three business days of your application.
Compare that document line by line against the Closing Disclosure you receive at least three business days before settlement.
Some fees can only rise 10% from the estimate, and others can't change at all.
Real estate agent commissions, transfer taxes, and title search costs often come out of their proceeds.
In a slower market, buyers ask sellers to cover a few thousand dollars in closing costs, and plenty agree.
Ask your lender about a "lender credit." You accept a slightly higher interest rate, and the bank covers part of your closing costs.
Run the math over the years you plan to stay.
On a $350,000 loan, a quarter-point rate bump costs roughly $60 extra a month.
If the credit saves you $6,000 upfront, that trade pays off in about eight years.
Your monthly payment includes principal, interest, taxes, and insurance.
The taxes and insurance portions sit in escrow, and lenders often collect several months upfront to seed the account.
That's why your first-year closing costs can look larger than the fee list alone.
Some lenders tack on courier charges, "processing" fees, or rate-lock fees that vary widely.
A 2023 federal push pressured banks to drop some of these, but they haven't disappeared.
Get at least three Loan Estimates and compare the total, not just the rate.
One more trap: your final walkthrough and closing date.
If your rate lock expires because the seller delays, you may pay a fee to extend it.
Build a buffer into your timeline, and don't schedule closing on the last day of your lock.
First-time buyers should also check state and local programs.
Many offer grants or low-interest second loans that cover down payment and closing costs, often with income limits.
Your loan officer won't always mention them.
Ask directly. **The bottom line:** closing costs are a real, unavoidable part of buying a home, and the difference between a fair bill and an inflated one is usually two or three phone calls.
Get your Loan Estimate early, question every line, and negotiate what you can.
Final Thoughts
Saving a few thousand dollars here is often easier than saving it on the purchase price.