When purchasing a home, you should have money set aside for the home purchase down payment (typically 5% to 20% or more) and closing costs (approximately 1% to 2%).
Home purchase down payment
The downpayment is the amount that you will apply towards the purchase price of the home, with the balance being the mortgage you will obtain from a lender. For example, if you are purchasing a $500,000 and you have a 5% downpayment, your downpayment would be $25,000 with the remaining $475,000 obtained as a mortgage.
For closing costs, you have to consider lawyer costs (legal fees and disbursements), closing adjustments (anything the seller has prepaid such as property taxes, utilities and other prepayments) and land transfer tax. Lawyer costs are typically $1,000 to $1,600 and you should budget approximately $500 to $4,000 in adjustments depending on the situation. As a rule of thumb, have at least 1% to 2% of the equivalent purchase price of your home ready for closing costs. Using the example above, you should have $5,000 to $10,000 ready for closing costs.
Other costs associated with purchasing a home include a home inspection ($300 to $400) and having a survey done if the home you have purchased does not have one ($1,000 to $2,000).