As your Realtor, my goal is to ensure you step into homeownership with confidence, not surprises. While the down payment and monthly mortgage are top of mind, savvy buyers know there are additional costs to plan for.
I guide my clients through every expense upfront, so there are no hidden budget shocks. Below, I’ve outlined the key costs (both one-time and ongoing) to factor into your homebuying plan. Knowledge is power. Let’s make sure you’re fully prepared.
1. Closing Costs
Closing costs typically run between 2–4% of the purchase price, and they’re due at the end of the transaction, right before you get your keys.
Common closing costs include:
- Escrow & title fees – Charged for handling the transaction and ensuring a clear title.
- Lender fees – Loan origination, underwriting, and document preparation.
- Recording fees & transfer taxes – Vary by city and county.
- Upfront fees
- Appraisal: Usually $500–$800, with an extra charge for rush orders.
- Credit report: A standard fee charged by lenders to check your credit history and score during the loan approval process.
Pro tip: Ask your lender and Realtor for a “Loan Estimate” early in the process so you’re not surprised. In competitive markets, it’s smart to budget on the higher end.
2. Impound Accounts
If your down payment is less than 20%, your lender will require an impound account (also called an escrow account). This means your property taxes and homeowners' insurance will be collected monthly with your mortgage payment, rather than paying them separately. While this can make budgeting easier, it will increase your monthly payment beyond just principal and interest.
3. Property Taxes
The property tax rate often averages around 1.25% of assessed value. Bond measures, such as Mello Roos, are generally associated with newer residential communities and can increase your property taxes further.
- For example: A $900,000 home could have annual property taxes around $11,000–$13,500.
- Taxes are due in two installments: November 1 and February 1 (delinquent if not paid by Dec 10 and April 10, respectively).
Pro tip: If your loan has an impound account, your property taxes will be collected monthly with your mortgage payment, so your PITI (principal, interest, taxes, insurance) will be higher than your base loan amount.
4. Homeowners' Insurance
Homeowners’ insurance protects you from loss or damage to your property, but costs can vary based on:
- Age and condition of the home
- Location (wildfire zones, earthquake risk, flood zones)
- Coverage levels and deductibles
Please note: Buyers will be responsible for purchasing their home insurance before closing, and insurance certificates will be provided to their lender. If the home is located in a high wildfire risk area, you may need a specialty insurer, which can significantly raise costs.
Pro tip: Earthquake insurance is separate in California and can be pricey, but for many homeowners, it’s worth serious consideration.
5. Maintenance & Repairs
A good rule of thumb: try to budget for upkeep on your new home to maintain some of the items listed below:
- Home inspection reports
- Pest inspection reports
- Roof repairs
- Plumbing or electrical work
- Appliance replacement
Older homes can have more frequent and costly repairs, so plan accordingly.
Pro tip: Get a thorough home inspection before closing and prioritize repairs that prevent bigger issues later.
6. HOA Fees
If you’re buying a condo or a home in a planned community, you’ll likely have Homeowners Association (HOA) dues. HOA fees can range from $300 to $900+ per month, depending on amenities and property size.
HOA fees typically cover:
- Exterior maintenance and landscaping
- Building insurance
- Common area upkeep (pools, gyms, security)
Pro tip: Review the HOA’s financials and rules before you buy. Poorly managed HOAs can mean rising fees or surprise special assessments.
7. Sewer Lateral Compliance
In several cities and counties, a Private Sewer Lateral (PSL) inspection and compliance certificate is required whenever a home is sold. If the lateral doesn’t pass inspection, it must be repaired or replaced—often within a set timeline.
Typical costs:
- Minor repairs: $3,000–$5,000
- Full replacement: $7,000–$15,000+
Pro tip: PSL compliance is sometimes negotiated between buyer and seller, but buyers should budget in case it becomes their responsibility.
How it works:
- The seller’s agent usually provides a PSL inspection so buyers are aware of any work needed.
- If repairs aren’t completed before closing, buyers can request a 6-month extension from the city/county. A filing fee under $200 will be charged.
- During this time, roughly $4,500 is held in escrow until the buyer completes the work and submits the compliance certificate (city/county dependent).
8. Sidewalk Repair Requirements
Several cities and counties hold property owners responsible for maintaining sidewalks adjacent to their property. If an inspection during the sale process finds cracks, uplift from tree roots, or other trip hazards, the city may require repairs before closing or within a set period afterward.
Typical costs:
- Small repair sections: $1,000–$3,000
- Extensive replacement: $5,000+
Pro tip: In places like Berkeley and Oakland, sidewalk compliance is tied to point-of-sale ordinances, so check the rules before making an offer.
How it works:
- The seller’s agent usually provides a sidewalk repair inspection so buyers are aware of any work needed.
- If repairs aren’t completed before closing, buyers can request a 3-month extension from the city/county. A filing fee under $100 will be charged.
The Bottom Line
Buying a home is an exciting milestone, but being financially prepared for all the costs, both upfront and ongoing, will protect you from stress and keep your budget healthy. Work with a Realtor who understands local market nuances, and build a cushion into your savings so these costs don’t catch you off guard.
If you’re planning to buy, I’d be happy to walk you through the numbers in detail for your price range and neighborhood.