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How Much Does it Cost to Buy a House?

Matthew Levy Updated: June 27, 2023 • 9 min read
Buy a House

Buying a house involves many costs beyond the primary ones, like a down payment and a mortgage. When you're deciding whether you're financially ready for homeownership, be sure to plan for other costs that can quickly add up. Closing costs, ongoing maintenance fees, insurance and renovations are just a few costs that you should consider. These costs will vary significantly across different regions and states.

Average Cost of Housing in the US

The average cost of housing in the US changes considerably based on factors like location, type of house, and local real estate market conditions. As of March 2023, the US Census Bureau reported a median sales price of $449,800 for new homes sold, with an average sales price of $562,400. 

The cost of housing between state to state can vary significantly. For example, the median home value in Hawaii is $636,400, whereas the median home in West Virginia is only $123,200. In coastal cities such as San Francisco or New York City, home prices can easily be in the millions of dollars. Meanwhile, more affordable regions like the Midwest or the South provide homes at significantly lower prices.

The type of house you choose—single-family homes, townhouses, or condominiums—also affects the overall cost.  For example, a 3-bedroom single-family home in a suburban area may cost around $600,000, while a 1-bedroom condominium in the same location may cost around $300,000.

As you evaluate your financial readiness to buy a house, it's crucial to consider these variables alongside the initial and ongoing expenses you'll encounter as a homeowner, such as down payments, monthly bills, and unexpected costs. 

additional homebuying costs

How Much Does a House Cost?

When you plan to buy a house, you must consider various factors influencing the price. These factors include the location, size, age, condition, and amenities of the house. It's essential to understand these elements when searching for a home to ensure you find one that suits your needs and budget.

  • Location: Housing prices vary widely throughout the country. The Federal Reserve Bank of St. Louis reports that in the Northeast, the median price of a home is $747,000. In the Midwest, the price is much lower, at $399,800, while the South and West carry price tags of $426,100 and $569,200, respectively. 
  • Size: The average price per square foot of a home is around $244, according to the National Association of Realtors. Therefore, a 1,500 square foot house would have an estimated cost of $366,000, while a larger home of 2,500 square feet would be priced around $610,000, based on the average national figure. 
  • Age: Newer homes often come with modern amenities and energy-efficient features. A new house with these types of amenities could be priced around $800,000. On the other hand, an older home that requires a lot of maintenance might be priced closer to $500,000. 
  • Condition: A house's condition, including its structural integrity and the state of its systems (electrical, plumbing, HVAC), can significantly influence its cost as well. A well-maintained home in excellent condition would be priced closer to $700,000 on average, while a home in need of much repair might run you closer to $500,000. 
  • Amenities: Houses with sought-after amenities such as updated kitchens, luxurious bathrooms, or spacious outdoor living areas may command a premium. Homes of this degree are pricing close to $1.2 million in many parts of the country, while their less luxurious alternatives are priced around the $600,000 mark. 

By understanding these factors, you can better estimate how much a house costs and make informed decisions during your home search.

Additional Costs of Buying a House

When purchasing a home, it's essential to be aware of the additional costs beyond the sale price. These expenses can add up quickly and may impact your overall budget. Here are some typical additional costs you should consider when buying a house:

  • Closing costs: These expenses typically range from 2% to 5% of the home's purchase price and include fees for loan origination, title search, appraisal and more.
  • Home inspection: A home inspection is crucial to ensure the property is in good condition and identify potential issues. Inspections typically cost between $300 and $500.
  • Property taxes: Homeowners are responsible for paying property taxes, which vary by location and are often based on the property's assessed value.  For example, Alabama has a property tax rate of 0.41%, while New Jersey's is much higher, at 2.49%. Typically, property tax is included in your mortgage payment, but separate from the interest and principal of your loan.
  • Homeowners insurance: This insurance protects your home and belongings from damage or loss due to events like fire, theft, or natural disasters. The cost of homeowners insurance varies depending on factors such as the home's value, location, and coverage levels. For example, a single-family home valued at $500,000 in a high-risk area for natural disasters might have an annual insurance premium of around $2,000.
  • Homeowners Association (HOA) fees: If you're buying a property within a community governed by an HOA, you may need to pay monthly or annual fees for services like landscaping, amenities, and maintenance. A townhouse in a community with extensive amenities such as a pool, clubhouse, and maintenance services might have monthly HOA fees of around $500.
  • Repairs and renovations: Depending on the condition of the home, you may need to budget for repairs or improvements, such as updating appliances, replacing the roof, or repainting the interior. For instance, replacing the roof of a single-family home could cost around $10,000 to $20,000, while repainting the interior might range from $1,500 to $3,000.

By considering these additional costs, you can better prepare for the financial responsibilities of buying a house and avoid unexpected surprises.

Closing costs of home's purchase price

Breakdown of the Costs

Understanding the various costs associated with buying a house can help you create a realistic budget and avoid unexpected expenses. Here's a table of some common costs you'll encounter during the home-buying process:



Average Cost

Down payment

Initial amount you pay toward the home's purchase price

3% to 20% of the sale price

Closing costs

Fees for finalizing your mortgage

Typically 2% to 5% of purchase price. May include additional fees. 

Home inspection fees

Identifies potential issues with property

Usually between $300 and $500.

Appraisal fees

Determines the property’s value

Generally $300 to $500

Earnest money deposit

Good-faith deposit offered to the seller

Often 1% to 2% of purchase price

Moving expenses

Cost of hiring movers, packing supplies, truck

Varies widely, anywhere from $1,250 for local moves to $5,000+ for long-distance moves

Utilities and services

Setup and installation costs

Can vary anywhere from $30 to $150 per utility

Remember to account for these extra costs in your homebuying budget, as they can significantly impact your overall expenses. By understanding the breakdown of these costs, you can better prepare for the financial commitment of buying a house.

Average Cost of Owning a House per Month

After purchasing a house, you'll encounter various ongoing expenses that contribute to the average cost of owning a house per month. These costs can vary depending on the property's location, size, and age. Here's a breakdown of some common monthly expenses:



Average Cost

Mortgage payments

Will depend on your loan amount, interest rate, and term.

The national average mortgage payment is around $2,317. However, this varies dramatically state by state. 

Property taxes

Property taxes vary by location and are based on your home's assessed value.

The median property tax amount in the US per year is $2,459. This too, changes state by state. 

Homeowners insurance

Insurance protects your home and belongings from damage or theft.

Approximately $1,820 per year, or around $150 per month.

Maintenance and repairs

Regular maintenance is essential for keeping your home in good condition.

Budgeting around 1% to 3% of your home's purchase price for maintenance is recommended.


Monthly utility costs include electricity, water, gas, and trash services.

The average household spends around $400 per month on utilities.

Homeowners Association (HOA) Fees

If your property is part of an HOA, you'll need to pay monthly or annual dues

These fees vary significantly by state. For example, New York has the highest median monthly fees of $570, whereas Wyoming has the lowest median HOA fees, coming in at $100 per month. 

As you can see, total homeownership costs can quickly add up to a total average spend of upwards of $3,000 per month. By considering these monthly expenses, you can gain a more accurate understanding of the average cost of owning a house per month and better prepare for the financial responsibility of homeownership.

is property tax included in mortgage

Ways to Lower the Cost of Buying a House

Reducing the cost of buying a house can make homeownership more affordable and accessible. Here are some strategies to help you lower the expenses associated with purchasing a home:

  • Save for a larger down payment: A larger down payment can reduce your mortgage amount, lower your interest rate, and potentially eliminate the need for private mortgage insurance. A higher down payment would generally be considered putting more than 20% down. 
  • Improve your credit score: A higher credit score can help you secure a better mortgage interest rate, reducing your overall borrowing costs. Read our tips on How to Improve Your Credit Score Fast.
  • Shop around for the best mortgage rates: Don't settle for the first mortgage offer you receive. Compare multiple lenders to find the best interest rate and loan terms.
  • Negotiate with the seller: Try negotiating the purchase price or asking the seller to cover part or all of the closing costs, which can quickly add up to 2-5% of the total home price. 
  • Choose a less expensive location: Properties in more affordable neighborhoods or smaller cities can cost significantly less than homes in popular, high-priced areas.
  • Opt for a fixer-upper: Buying a house that requires some work can be a more affordable option, but consider the cost of repairs and renovations before deciding. Replacing flooring or updating electrical and plumbing systems can range from $20,000 to $75,000 or more.
  • Use government programs: Look into government-backed loan programs, such as FHA or VA loans, which often have lower down payment requirements and more lenient credit score criteria.

By exploring these strategies, you can potentially lower the cost of buying a house and make your dream of homeownership more attainable.

Regional Differences in Housing Costs

Housing costs across the United States vary significantly due to factors such as local economies, job opportunities, lifestyle preferences, and supply and demand. To better understand these differences, it's helpful to examine the highest and lowest cost of living states with specific statistics.

  • Cost of living: States with a high cost of living, like Hawaii and New York typically have higher housing prices. For instance, the median price for a single-family home in Hawaii is $730,511. In contrast, Mississippi has lower housing costs, with median single-family home price of $140,818.
  • Job market: Areas with strong job markets and higher salaries can increase housing demand and prices. Technology hubs like Seattle or Austin have experienced significant growth in housing costs due to the influx of well-paid tech professionals. The average Seattle home value is $825,275, according to Zillow. Meanwhile, states with high unemployment rates like West Virginia and Mississippi, have low housing costs. 
  • Climate and geography: Desirable climates or picturesque landscapes can make certain areas more attractive, leading to higher property values. San Diego, known for its ideal climate, has a median home price of $850,000, while Aspen, known for its scenic beauty, has an even higher media price of over $2.8 million. In contrast, Oklahoma, which experiences frequent tornadoes and severe storms, has a median home price of just $160,000. 
  • Local amenities and infrastructure: The presence of good schools, healthcare facilities, public transportation, and recreational options can impact housing prices in a region. That's why the median home price in places known for their amenities like Palo Alto, California, is upwards of $3.2 million. States facing difficulties in public services and infrastructure like Alabama, Louisiana and Mississippi generally offer cheaper housing. 
  • Population growth and urbanization: Rapid population growth and urbanization can lead to increased housing demand and higher prices in certain regions. Cities like Denver, Colorado, have experienced significant population growth since the pandemic. For example, the median home price in Denver is about $550,000, up from its 2018 average of about $400,000. West Virginia, in contrast, has experienced consistent population decline in recent years. 

Researching local markets and trends can help you make an informed decision and find a property that fits your budget and lifestyle preferences.

Housing prices in a region


Understanding how much it costs to buy a house involves considering the average cost of housing in the US and the various factors that determine the overall cost. From the down payment and additional costs of buying a house to the average cost of owning a house per month, knowing these expenses can help you better prepare for homeownership. Remember that regional differences in housing costs can significantly impact the overall affordability of a home. By researching local markets, understanding the factors affecting housing prices, and exploring ways to lower the cost of buying a house, you can make informed decisions and find the perfect home that suits both your lifestyle and budget.

Written by Matthew Levy

Matthew is a freelance financial copywriter with 14+ years in financial services. He holds a Bachelor of Science degree in Economics with business and finance options and is a CFA Charterholder. He is from Vancouver, Canada, but writes from all over the world.