How much money do I need to buy a $400,000 home as a first-time buyer?

With a 3.5% FHA down payment ($14,000), you'll need approximately $26,000-$34,000 total to cover the down payment, closing costs ($10,000-$16,000), and reserves ($2,000-$4,000). With a conventional 5% down payment, plan for $30,000-$38,000 total.

What are closing costs and how much should I expect to pay?

Closing costs include lender fees, title insurance, appraisal, attorney fees, prepaid taxes, and insurance. They typically run 2-4% of the purchase price. On a $400,000 home, expect $8,000-$16,000 in closing costs.

Can I buy a home with no money down?

Yes, through VA loans (for eligible veterans and active military, 0% down) or USDA loans (for eligible rural properties, 0% down). Some state housing finance agencies also offer down payment assistance programs that cover 3-5% of the purchase price as a grant or forgivable loan.

What is PMI and how much does it cost?

Private mortgage insurance (PMI) is required on conventional loans with less than 20% down. It typically costs 0.5-1.5% of the loan amount annually. On a $380,000 loan (5% down on a $400,000 home), PMI runs $1,900-$5,700 per year, or $158-$475 per month. It drops off once you reach 20% equity.

What hidden costs do first-time buyers miss?

The most commonly missed costs are: maintenance reserves (1-2% of home value annually, $4,000-$8,000 on a $400,000 home), immediate repairs or updates after move-in ($2,000-$10,000), moving costs ($1,500-$5,000), and the gap between renter's and homeowner's insurance ($800-$2,000 more per year).

First-Time Homebuyer Cost Breakdown 2026

April 16, 2026

Buying your first home is the most expensive thing you've done so far, and the total cost is higher than the purchase price suggests. The down payment is just the beginning. Here's every dollar you should plan for in 2026, based on a $400,000 home — the approximate national median.

The Down Payment

Your down payment is the cash you bring to the table at closing. The amount depends on your loan type:

Conventional loan (5% down): $20,000
FHA loan (3.5% down): $14,000
Conventional with 3% down (Fannie Mae HomeReady / Freddie Mac Home Possible): $12,000
VA loan (0% down): $0 — available to eligible veterans and active-duty military
USDA loan (0% down): $0 — for eligible rural and suburban properties

The 20% down payment ($80,000 on a $400,000 home) is a myth for first-time buyers. Only about 12% of first-time buyers put 20% down in 2025. Most put down 3-10%.

The trade-off: less money down means a larger monthly payment and, on conventional loans, private mortgage insurance (PMI) until you reach 20% equity.

Closing Costs

Closing costs run 2-4% of the purchase price — or $8,000-$16,000 on a $400,000 home. Here's the breakdown:

Lender Fees

Origination fee: 0.5-1% of the loan amount ($1,900-$3,800)
Appraisal fee: $400-$700
Credit report fee: $30-$75
Underwriting fee: $400-$900

Title and Legal

Title search and insurance: $1,500-$3,000
Attorney/settlement fees: $500-$1,500 (required in some states)
Recording fees: $100-$500

Prepaid Items

Prepaid property taxes: 2-6 months of taxes escrowed upfront ($800-$4,000)
Prepaid homeowner's insurance: First year's premium ($1,200-$4,000)
Prepaid interest: Per-diem interest from closing date to the end of the month ($300-$1,500)

Government Fees

Transfer taxes: Vary by state and municipality, from $0 (some states) to 1-2% of the sale price
FHA upfront mortgage insurance premium: 1.75% of the loan amount ($6,755 on a $386,000 FHA loan — this can be rolled into the mortgage)

Inspections and Due Diligence

These costs come out of pocket before closing and are non-refundable even if you don't buy the home:

General home inspection: $350-$600
Radon test: $125-$200
Termite/pest inspection: $75-$150
Sewer line scope: $150-$350 (strongly recommended for homes built before 1980)
Well and septic inspection: $300-$600 (if applicable)
Mold inspection: $300-$600 (if warranted by visible signs or musty odors)

Total inspection costs typically run $500-$1,500. Don't skip inspections to save money — a $400 inspection that reveals a $15,000 foundation problem is the best ROI you'll ever get.

Monthly Costs After Closing

Your monthly housing payment includes more than principal and interest. On a $400,000 home with 5% down ($380,000 loan) at a 6.5% interest rate:

Principal and interest: ~$2,402/month
Property taxes: $250-$667/month (depending on your state's tax rate)
Homeowner's insurance: $100-$333/month
PMI: $158-$475/month (until 20% equity reached)
HOA fees (if applicable): $100-$800/month

Total monthly PITI (principal, interest, taxes, insurance) on this example: approximately $2,910-$3,877 depending on location and HOA fees.

The Costs Most First-Time Buyers Forget

Buyer's Agent Compensation

In 2026, you must agree to your buyer's agent's compensation in writing before they show you homes. This is typically 2-3% of the purchase price ($8,000-$12,000 on a $400,000 home). The seller may offer a concession to cover this, but don't count on it — budget for it as a cost.

Earnest Money Deposit

When you make an offer, you'll put down an earnest money deposit — typically 1-3% of the purchase price ($4,000-$12,000). This isn't an additional cost (it's applied to your down payment at closing), but you need the cash available when your offer is accepted, which may be weeks before closing.

Moving Costs

Local moves (within the same city) cost $1,000-$3,000 for a professional moving company. Long-distance moves run $3,000-$8,000+ depending on distance and volume. Even a DIY truck rental is $200-$500 plus gas.

Immediate Move-In Expenses

New locks, basic tools, cleaning supplies, window coverings, and minor repairs typically add up to $1,500-$5,000 in the first month. If the home needs painting, new flooring, or appliance upgrades, budget $5,000-$15,000.

Maintenance Reserve

Budget 1-2% of the home's value per year for maintenance and repairs. On a $400,000 home, that's $4,000-$8,000 annually, or $333-$667/month set aside. This covers the inevitable water heater failure, roof leak, or HVAC repair.

Total Cash Needed: A Summary

For a $400,000 home with 5% down payment on a conventional loan:

Down payment: $20,000
Closing costs: $10,000-$16,000
Inspections: $500-$1,500
Moving and move-in costs: $2,500-$8,000
Cash reserves (2-3 months of payments): $6,000-$12,000

Total: $39,000-$57,500

With an FHA loan (3.5% down), the range drops to approximately $33,000-$51,500. With a VA loan (0% down), you still need $19,000-$37,500 for closing costs, inspections, moving, and reserves.

The bottom line: budget 10-15% of the purchase price in total cash, regardless of your down payment amount. Having enough in reserves means you won't be cash-strapped the moment something breaks.

Ready to start your home search? Find experienced agents who work with first-time buyers on The Realtor Rankings.

Frequently Asked Questions

How much money do I need to buy a $400,000 home as a first-time buyer?: With a 3.5% FHA down payment ($14,000), you'll need approximately $26,000-$34,000 total to cover the down payment, closing costs ($10,000-$16,000), and reserves ($2,000-$4,000). With a conventional 5% down payment, plan for $30,000-$38,000 total.
What are closing costs and how much should I expect to pay?: Closing costs include lender fees, title insurance, appraisal, attorney fees, prepaid taxes, and insurance. They typically run 2-4% of the purchase price. On a $400,000 home, expect $8,000-$16,000 in closing costs.
Can I buy a home with no money down?: Yes, through VA loans (for eligible veterans and active military, 0% down) or USDA loans (for eligible rural properties, 0% down). Some state housing finance agencies also offer down payment assistance programs that cover 3-5% of the purchase price as a grant or forgivable loan.
What is PMI and how much does it cost?: Private mortgage insurance (PMI) is required on conventional loans with less than 20% down. It typically costs 0.5-1.5% of the loan amount annually. On a $380,000 loan (5% down on a $400,000 home), PMI runs $1,900-$5,700 per year, or $158-$475 per month. It drops off once you reach 20% equity.
What hidden costs do first-time buyers miss?: The most commonly missed costs are: maintenance reserves (1-2% of home value annually, $4,000-$8,000 on a $400,000 home), immediate repairs or updates after move-in ($2,000-$10,000), moving costs ($1,500-$5,000), and the gap between renter's and homeowner's insurance ($800-$2,000 more per year).