The biggest question people tend to have when thinking about buying a house is how much money they’ll need. You might focus only on the down payment if you’re getting ready to buy, and you could be neglecting the other expenses you’ll need to cover in the short term.

The following is a guide to the money you actually need to buy a house, and you should make sure you’re prepared before you take the next step.

The Down Payment

Ideally, if you’re getting a mortgage, you should aim to save at least 25% of the sale price of the home in cash. This savings covers your down payment and also your closing costs and moving fees. If you were planning to buy a home that costs $250,000 you should save at least $60,000.

This figure probably sounds high, and it is.

Most buyers save only up to around 12% of the home price as a down payment, compared to 20%, which was the norm 30 years ago.

A down payment, regardless of how much you have to put toward it, is the contribution you’re making toward the purchase. Your down payment is your ownership stake in the home. The lender then provides you with the rest of the money.

Even though lenders may not require that you put 20% down, it improves your chances of being approved and getting a decent rate. You can also avoid having to pay mortgage insurance.

The minimum down payment you have to pay depends on the type of loan you get.

There are a couple of places you can’t typically get your down payment from. The first is cash, but what’s meant by this is actual cash you’re stashing around your house. You have to use money that passes through a financial institution for your down payment.

You also can’t use an unsecured loan. For example, you can’t use money from a personal loan or a credit card for your down payment.

Down Payment Requirements by Loan Type

• The Federal Housing Administration backs an FHA loan, and you can pay as little as 3.5% down.
• The Department of Veterans Affairs guarantees VA loans, and if you qualify for this type of loan, you don’t have to pay a down payment. VA loans are available only to veterans, current service members and some surviving spouses.
• The U.S. Department of Agriculture backs a USDA loan. To qualify for these loans, which have no down payment requirement, you have to be a rural or potentially a suburban home buyer and meet specific program requirements.
• Conventional mortgages including the Freddie Mac Home Possible mortgage and Fannie Mae HomeReady, may require a down payment as low as 3%.

The down payment you’re required to make can also depend on your lender and personal credit history. For example, if you’re getting an FHA loan and have a credit score of at least 580, you may just have to make a minimum down payment of 3.5%. If you have a lower credit score, you may need to make a 10% down payment.

Are There Benefits of a Bigger Down Payment?

If you’re in the process of calculating how much you’ll need to buy a home, there are benefits of making the largest down payment you reasonably can.

When you make a larger down payment, you’ll get lower upfront and ongoing fees. You’ll have more equity in your home from the start, a lower mortgage payment each month, and you’re likely to qualify for a better interest rate on your mortgage.

Closing Costs

When you’re determining how much money you need to buy a house, don’t forget about closing costs. Buyers usually pay anywhere from 3-4% of the sale price of their home in closing costs. Closing costs are the fees for the services that allow you to close on a property officially.

As a buyer, closing costs include an inspection, appraisal, and fees related to loans like paperwork processing fees.

Finally, you’re going to have to factor moving expenses in too. If you’re moving locally, there may not be many moving expenses. If you’re making a long-distance move, this can add thousands of dollars to the cash you need on hand to buy a home.