How Much Money Do You Need To Buy A House?

Buying a house is a significant financial decision that requires careful planning and consideration. One of the most common questions asked by potential homebuyers is, "How much money do I need to buy a house?" In this blog, we will explore the various expenses involved in purchasing a property to help you better understand the costs associated with homeownership.

1. Down payment: This is the amount you need to save up to put towards the purchase price of the house. The minimum down payment is 5% up to $500,000 purchase price; between $500,000-1M purchase price, you will need 10% for that portion, and 20% for purchase price over 1M. For example, if you are purchasing a house for $575,000, you would need a minimum of $32,500 (5% of $500,000=$25,000, and 10% of the remaining $75,000=$7,500).

2. Property Inspection: This is optional but recommended. It can cost ~$400-$800, but typically around $550 for an average home. The cost will depend on the size and condition of the home, inspector you choose and any additional things you want to inspect (ie. WETT inspection for wood-burning fireplace or sewer scope inspection; these are not a part of a typical inspection and will be an additional cost). This expense is worthwhile as it can uncover any underlying issues that may affect the value or safety of the property.

3. Condo Doc Review: When purchasing a condo, this review is also optional but recommended. This may be even more important than a property inspection when purchasing a condo because these documents will help you understand the entire condo's financial health, previous and future capital costs, plans and maintenance, management, bylaws, etc. This will help you decide what the risks are to you and if this is a good investment. The condo doc reviewer specializes and is trained in reviewing these types of documents and will know what to look for and calculate what your potential financial risks are, if any. It costs about $550 for this review.

4. Lawyer Fees & Closing Costs: These are fees associated with finalizing the sale of the house. You will need a real estate lawyer to ensure that all legal aspects of the transaction are taken care of, protect your interests and ensure a smooth closing process. Closing costs will vary depending on the lawyer you hire, lender, mortgage amount, how property taxes were paid, and other administration costs and adjustments needed depending on your unique situation. I would budget for $1100-$1700 on average. 

5. Moving Costs: Whether you hire professional movers or do it yourself, you need to budget for packing supplies, truck rentals, and potentially storage fees. Moving costs can range widely depending on the distance and the amount of belongings you have. I would budget for $500-$1000 if you hire movers. 

While these expenses give you a general idea of the costs associated with buying a house, it's important to note that every situation is unique. Don't forget to also prepare for your new upcoming expenses such as utilities, property taxes, home insurance, and of course, mortgage payments. By understanding all of these costs and planning ahead, you can ensure a smoother home buying process and a more accurate financial picture of your future as a homeowner.

As always, I'm happy to answer any questions, walk you through the steps and help you understand what to expect if you are planning to purchase a home in the near future! Contact me at info@myedmontonhome.ca or 780-667-9879.