Buying a home is one of the most significant financial commitments you’ll ever make. While most buyers focus on the listing price and mortgage payment, they often underestimate the real cost of homeownership. Hidden costs like inspections, appraisals, property taxes, insurance, and HOA fees can quickly add up and catch buyers off guard.
In this post, we break down the significant hidden costs of buying a home, compare those costs across five U.S. cities—Phoenix, Salt Lake City, Orlando, Chicago, and Milwaukee—and answer the most frequently asked questions about home buying.
Table of Contents
- The True Cost of Buying a Home
- Comparing Hidden Costs in 5 Major U.S. Cities
- City-by-City Overview: Are HOA Fees Common?
- How Much Should You Budget for Hidden Costs?
- 15 Frequently Asked Questions About Buying a Home
- Final Thoughts
- Related Questions
The True Cost of Buying a Home
Let’s start with a breakdown of what most buyers don’t see coming.
1. Home Inspection Fees
Before you buy, you’ll want a professional to inspect the property for structural issues, pests, HVAC systems, and more. This is usually a buyer’s responsibility.
- Typical Cost: $300–$600
- Optional Add-ons: Radon, mold, sewer line, and roof inspections can add $100–$300 each.
2. Appraisal Fees
Lenders require a home appraisal to verify that the home’s value matches the loan amount.
- Typical Cost: $400–$700
- You usually pay this out of pocket during the loan process.
3. Property Taxes
Property taxes vary by state, county, and even neighborhood. These taxes are often prorated at closing and paid annually or through your mortgage.
- National Range: 0.3% – 2.5% of home value annually
- You might owe several months of taxes at closing.
4. Homeowners’ Insurance
This protects your home from damage, theft, and liability. Most lenders require you to pay the first year of insurance at closing.
- Typical Annual Cost: $900–$2,500, depending on location and coverage
5. HOA Fees
If your new home is in a planned community or condo complex, you might have to pay monthly HOA fees for maintenance and amenities.
- Monthly Range: $100–$1,000+
- Fees depend on the neighborhood, services offered, and location.
6. Closing Costs
Closing costs include lender fees, title insurance, escrow fees, recording fees, and more.
- Typical Cost: 2%–5% of the purchase price
- Often split between buyer and seller, but that’s negotiable.
7. Moving Costs
Even DIY moves have costs—renting a truck, buying boxes, taking time off work.
- Range: $500–$5,000 depending on the distance and size of the move
8. Ongoing Maintenance
Once you own the home, you’ll be responsible for its upkeep. This includes HVAC servicing, roof repair, plumbing, and yardwork.
- Recommended Annual Budget: 1%–3% of the home’s value
Comparing Hidden Costs in 5 Major U.S. Cities
Compare these hidden costs in Phoenix, Salt Lake City, Orlando, Chicago, and Milwaukee.
| City | Avg. Property Tax Rate | Insurance Estimate | HOA Fee Range | Home Inspection | Appraisal | Total Extra Budget (Est.) |
|---|---|---|---|---|---|---|
| Phoenix, AZ | ~0.60% | $1,200/year | $150–$400/month | $400–$600 | $500 | $10K–$18K |
| Salt Lake City, UT | ~0.65% | $900/year | $100–$250/month | $350–$550 | $450 | $8K–$15K |
| Orlando, FL | ~0.90% | $2,000/year | $200–$500/month | $400–$600 | $500 | $11K–$20K |
| Chicago, IL | ~2.25% | $1,800/year | $300–$700/month | $400–$700 | $600 | $14K–$25K |
| Milwaukee, WI | ~2.10% | $1,500/year | $100–$300/month | $350–$600 | $450 | $10K–$19K |
Note: These estimates include first-year property tax, insurance, a typical inspection and appraisal, average HOA fees for the first year, and a cushion for closing and moving costs.
Before buying a home, condo, or any property in these locations, it is essential to check all the associated rates and fees. We strongly encourage everyone to research, as costs and regulations can vary significantly from one area or county to another.
City-by-City Overview: Are HOA Fees Common?
Phoenix, AZ
Yes. Most newer homes are in planned communities with HOA fees ranging from $150 to $400/month.
Salt Lake City, UT
HOAs are common in townhomes and newer developments, but not always required in older homes. In the Salt Lake City area, I have seen some HOA fees as high as $700/month.
Orlando, FL
Yes. Many Orlando neighborhoods, especially gated communities, have HOA fees between $200 and $500/month.
Chicago, IL
Yes, especially for condos and townhomes. HOA fees in Chicago can reach $700 or more, especially in high-rise buildings.
Milwaukee, WI
Less common for single-family homes. Condos and specific subdivisions may have modest HOAs between $100 and $300/month.
How Much Should You Budget for Hidden Costs?
As a rule of thumb, you should budget an additional 3%–7% of the purchase price for hidden and upfront costs, including:
- Inspections
- Appraisals
- Taxes
- Insurance
- Closing costs
- Moving expenses
- HOA dues (first year)
Example:
For a $400,000 home, budget an extra $12,000 to $28,000 depending on the city and the property type.
15 Frequently Asked Questions About Buying a Home
What’s included in closing costs?
Title insurance, lender fees, escrow charges, recording fees, and more.
Who pays for the home inspection?
The buyer usually pays for the inspection.
Can I negotiate who pays closing costs?
Yes. Some sellers may agree to cover part of your costs to close the deal.
Is homeowners’ insurance required?
Yes, if you’re financing the home with a mortgage.
Do I have to pay property taxes upfront?
Usually, a prorated portion is paid at closing. After that, it’s part of your monthly mortgage escrow.
Are HOA fees optional?
No. If the home is in an HOA community, you must pay the fees.
Can HOA fees increase over time?
Yes. HOA boards can raise fees or issue special assessments.
What’s the average down payment?
Typical down payments range from 3% (for FHA loans) to 20% or more for conventional loans.
Does the lender require all appraisals?
Yes. They want to make sure the home is worth the loan amount.
What happens if the appraisal is too low?
You may need to renegotiate with the seller, pay the difference, or walk away.
Can I skip the home inspection?
You can, but it’s not wise. It could save you from buying a money pit.
What are prepaid costs?
These include upfront payments for insurance, property taxes, and escrow reserves.
What is escrow?
Escrow is an account used by your lender to collect and pay property taxes and insurance on your behalf.
Can I shop for home insurance?
Yes. You can and should compare quotes to find the best rate and coverage.
What if I can’t afford all the upfront costs of owning my home?
Some programs offer down payment assistance or help with closing costs. Speak to a mortgage advisor or housing counselor.
Final Thoughts
Buying a home is more expensive than it looks on paper. While the mortgage is your biggest expense, the hidden costs can make or break your budget—especially in cities with high taxes or HOA fees.
Whether you’re moving to sunny Orlando, bustling Chicago, or suburban Salt Lake City, plan ahead for these extra expenses.
Pro Tip: Use a real estate agent and lender who explain all fees and help you calculate your all-in budget before you make an offer. Surprise costs are much easier to deal with when they’re not surprises.
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Related Questions
Why Is Real Estate Called ‘Real Estate’?
Real Estate is one of those series of words that many of us use daily. We may not realize the history and story behind why real estate is called “real estate.”
The word Real Estate comes from the Latin word realis, but it refers ideally to the physical and economic characteristics of real estate or real property. The word Real Estate can date back to the 17th Century. Today, Real Estate is a legal term used in many English-speaking jurisdictions worldwide.
By clicking here, you can read more about Why Is Real Estate Called ‘Real Estate’?
What Is A Life Estate? Real Estate Explained
A life estate is when a person is granted the right to use the property for the term of their life. Once the life estate holder dies, the property is passed on to the owner. The individual who holds the life estate does have rights to the property and can usually still get income from the property for the term of their life.
By clicking here, you can read more about What Is A Life Estate? Real Estate Explained.
What Is A Proof Of The Ownership Of A House?
Buying and selling real estate can be a highly complex matter. There are many types of documents that you need to know about.
The deed is the proof of ownership of the house or land. The deed is a legal instrument that shows who owns the home and land. There are many kinds of deeds, from the warranty deed, special warrant, bargain and sale deed, and quitclaim deed. Even though they have some similarities, these deeds also have many differences.
By clicking here, you can read more about What Is A Proof Of The Ownership Of A House?
