The real cost of buying a home

If you’re considering buying a home, the first question you should ask even before attending an open house or shopping for a mortgage is, “How much can I afford?” But the answer is not as straightforward as you might think. According to Judy Thompson, Housing Specialist for Sacramento/Stockton with ByDesign Financial Solutions, many people don’t consider costs associated with home ownership beyond the mortgage payment when they determine a budget – if they do a budget at all.

“Establishing a budget is the most important thing a homebuyer can do,” Thompson says. “People need to understand how much they truly can afford for a loan when taken with all of their other expenses.”

Thompson identified a few of those easy-to-forget expenses for us:

Homeowners insurance
You can’t get a mortgage without it, and it’s considerably more expensive than renters insurance because it covers the cost of your dwelling and the land. If you live in a flood zone where flood insurance is mandatory, that’s an additional expense, Thompson adds.

Property taxes
Thanks to Proposition 13, property tax in California is fixed at one percent. But with the median price of a home in Sacramento around $360,000, you’ll still pay a good chunk of change each year. And, if your home appreciated in value since it was last assessed, you will have to pay an additional supplemental tax on the difference in value the first year.

Water, sewer and trash
If you rent an apartment or house, the cost for these city services is probably included in your rent. But once you own your home, you must pay for them yourself. This homeowner pays about $100 per month in Sacramento City. Contact your city or town government to find out what you can expect.

If your new home is bigger than your previous abode, Thompson cautions, it may cost more to heat and cool. Figure out what you’re paying per unit for heat and air conditioning, then extrapolate that to the square footage of the house you hope to buy.

Ongoing maintenance
When something breaks, instead of calling the landlord, you’ll be calling the plumber, the electrician or the repair man, and paying for it out of your own pocket. It’s hard to anticipate how much ongoing maintenance your home will need, but we can guarantee that you’ll need it. Thompson encourages buyers to purchase a home warranty, which can cover major repairs to such important things as the heating, plumbing, electrical system and water heater.

Landscaping and yard work
Are you going to someone to mow the lawn or doing it yourself? A lawnmower can cost $200 or more, not to mention all the tools, flowers, mulch, fertilizer and weed killer you’ll need if you’ve got garden beds. To make sure homebuyers have considered all the potential costs, Thompson recommends that they attend a free home buying class or visit an agency that offers free one-on-one counseling, such as ByDesign Financial Solutions, online at

“A homebuyer class will help you understand everything that is involved in buying a home,” Thompson says. “Get professional help before you sign the papers to make sure that you can truly afford the loan.”