One of the biggest questions I hear from people thinking about buying a home is:

“How much money do I actually need to have saved?”

And one of the biggest misconceptions is that you need 20% down before you can even start thinking about buying.

The truth is, the amount of money you need to buy a home depends on several factors, including your loan program, purchase price, closing costs, earnest money, moving expenses, and how much money you want to keep in savings after you close.

So, let’s break it down.

💰 1. Your Down Payment

Your down payment is usually the first expense people think about when they ask, “How much money do you need to buy a home?”

But you don’t necessarily need 20%.

Depending on your situation and the loan program you qualify for, your down payment could be considerably less.

For example, on a $300,000 home, here’s what different down payments could look like:

The amount you need depends on the loan program and lender requirements. The Consumer Financial Protection Bureau explains that there are many different down payment options, and some loan programs allow buyers to put down considerably less than 20%.

For more information about planning your down payment and determining what you can comfortably afford, check out the Consumer Financial Protection Bureau’s guide to figuring out how much you want to spend on a home.

🏡 USDA Loans: Could You Buy With No Down Payment?

For some eligible buyers, a USDA loan may provide an opportunity to purchase a home with 100% financing, meaning a down payment may not be required.

However, USDA loans aren’t available for every buyer or every property. Eligibility depends on factors such as the property’s location, household income, occupancy requirements, and other program requirements.

If you’re considering a home in an eligible area, you can learn more about the USDA Rural Development Single Family Housing Guaranteed Loan Program.

⭐ Veterans and Active-Duty Service Members

If you’re a Veteran or active-duty service member, don’t automatically assume you need a large down payment to become a homeowner.

Eligible borrowers using a VA-backed purchase loan may be able to purchase a home with no down payment, when the program and lender requirements are met. The VA says nearly 90% of VA-backed loans are made with no down payment.

You can learn more about eligibility and the VA-backed purchase loan through the U.S. Department of Veterans Affairs.

But here’s something important:

Zero down does NOT necessarily mean zero money needed.

Even if your loan doesn’t require a down payment, you may still have other expenses to consider, including closing costs, earnest money, inspections, moving expenses, prepaid expenses, and other costs associated with buying a home.

That’s why it’s important to look at the whole picture, not just the down payment.

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💵 2. Earnest Money

Another expense buyers should understand is earnest money.

Earnest money is a deposit a buyer may make after an offer is accepted to show the seller that they’re serious about purchasing the home.

It’s important to understand that earnest money is not usually an additional expense on top of your purchase price.

When properly applied at closing, it is generally credited toward your purchase costs, such as your down payment or other amounts due at closing.

The amount of earnest money can vary depending on the transaction and the terms of the contract.

It’s also important to understand when the earnest money is due, where it will be held, how it will be handled at closing, under what circumstances it may be refundable, and when it could potentially be at risk.

The exact terms depend on the contract and circumstances of the transaction.

For buyers, the important takeaway is:

You may need cash available before you ever get to closing.

That’s why it’s important to understand your anticipated upfront costs before you start making offers.

Your real estate agent can explain the contractual terms, while your lender can help you understand how the earnest money will be reflected in your overall cash-to-close.

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💳 3. Closing Costs

Closing costs are another important part of the answer to “How much money do I need to buy a home?”

Closing costs are separate from your down payment and can include expenses such as loan-related fees, appraisal, title-related expenses, recording fees, prepaid property taxes, homeowners insurance, prepaid interest, and other transaction-related expenses.

The amount you’ll pay can vary depending on the purchase price, loan type, lender, property, location, and specific terms of your transaction.

As a general planning guideline, the Consumer Financial Protection Bureau says closing costs typically range from 2% to 5% of the purchase price, not including the down payment. However, your actual costs may be higher or lower.

For example, on a $300,000 home, 2% to 5% would be approximately $6,000 to $15,000.

That’s only a planning estimate, not a quote.

Your lender will provide a more specific estimate based on your loan and transaction.

As you move through the mortgage process, your Loan Estimate will give you a clearer picture of the costs associated with your loan.

You can also use the Consumer Financial Protection Bureau’s Loan Estimate guide to help you understand the information you’ll receive.

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🚚 4. Moving Expenses

It’s easy to focus so much on buying the house that you forget about actually moving into it.

Depending on your situation, you may need money for a moving company or truck rental, packing supplies, temporary storage, utility deposits, temporary housing, travel expenses, new furniture, cleaning, and other moving-related expenses.

And if you’re relocating from another state to South Carolina, these expenses can add up quickly.

This is one reason I encourage buyers to think beyond the amount they need to bring to closing.

The CFPB recommends accounting for moving costs, furnishings, renovations, and an emergency cushion when determining how much cash you actually have available for your purchase.

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🔨 5. Immediate Home Expenses

Even a home that looks move-in ready may have expenses after you receive the keys.

You may want to budget for changing locks, basic tools, cleaning supplies, minor repairs, painting, appliances, window coverings, landscaping, furniture, and home maintenance.

You don’t have to do everything at once.

But having some money available after closing can make the transition much less stressful.

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🏦 6. Your Emergency Cushion

This is one of the areas I don’t want buyers to overlook.

Just because you can use all of your savings to purchase a home doesn’t necessarily mean you should.

Homeownership comes with ongoing expenses, and unexpected things can happen.

The CFPB recommends setting aside an emergency cushion, with a general rule of thumb of at least three to six months of expenses, when determining how much money you can comfortably use toward purchasing a home.

You don’t want to walk away from the closing table with a beautiful new home but nothing left in your savings account.

Give yourself some breathing room if you can.

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So, How Much Money Should You Have Saved?

Instead of focusing on one magic number, think about your home-buying savings in six buckets:

1. Down payment, the amount required depends on your loan program and situation.

2. Earnest money, money that may be required when your offer is accepted and may be credited toward your purchase costs at closing, depending on the transaction.

3. Closing costs, the costs associated with completing your purchase and obtaining your mortgage.

4. Moving expenses, the cost of getting yourself, your belongings, and your household into your new home.

5. Immediate home expenses, the things you’ll need once you become a homeowner.

6. Emergency savings, money you keep available for the unexpected.

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The Bottom Line

You don’t necessarily need 20% down to buy a home.

Depending on your circumstances, you may qualify for a loan program requiring considerably less, or potentially no down payment.

But your down payment is only one piece of the puzzle.

When you’re figuring out how much money you need to buy a home, consider the entire picture:

Down payment + earnest money + closing costs + moving expenses + immediate home expenses + emergency savings

The goal isn’t just to get the keys.

It’s to get the keys and still feel financially prepared for what comes next.

If you’re thinking about buying a home in Lexington, Columbia, or somewhere else in the Midlands of South Carolina, understanding your numbers before you start shopping can help you make more informed decisions.

And if you’re not sure where to begin, that’s okay.

Start with the questions. Then build the plan.

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🏡 Thinking About Buying?

If homeownership is on your future list, let’s talk about what the process could look like for you.

Whether you’re a first-time buyer, relocating to South Carolina, a Veteran or active-duty service member, or simply trying to understand your options, having a plan before you start house hunting can make a big difference.

Ready to talk about your options?

Make Moves with Faith
Faith Morris | ERA Wilder Realty
Serving Lexington & the Midlands of South Carolina