Buying your first home in Ankeny, Des Moines, Perry or another Central Iowa community? One of the most common budgeting mistakes is planning for the down payment but forgetting about other costs that come before and after closing.
1. Your down payment is only one part of your cash-to-close budget
The amount you put down depends on the mortgage program, your qualifications and your goals. A 20% down payment is not a universal requirement. Ask a trusted lender to compare financing options and explain how each changes your upfront costs and monthly payment.
2. Plan for closing costs, too
Closing costs often include lender charges, title-related expenses, appraisal fees, recording charges, prepaid expenses and escrow deposits. The Consumer Financial Protection Bureau suggests that buyers use roughly 2% to 5% of the purchase price as an initial closing-cost planning range, separate from the down payment. Your actual figure depends on the lender, loan type and property.
For example, on a $250,000 purchase, that broad planning range is approximately $5,000 to $12,500. It is not a quote or promise of what your transaction will cost. Your lender's Loan Estimate and your closing professional can help you narrow the figure.
3. Budget for inspections and follow-up evaluations
A home inspection can help you understand the condition of major systems before you finalize the purchase. Depending on the property, you may also consider a radon test, sewer scope or specialist evaluation. Discuss inspection choices and deadlines with your agent before your offer is finalized.
4. Understand your full monthly payment, not just principal and interest
A mortgage payment can include principal, interest, homeowners insurance, property taxes and possibly mortgage insurance. Condominiums and some neighborhoods also carry association dues. The CFPB explains why the total monthly payment may be higher than the principal-and-interest number in a basic calculator.
In Iowa, property taxes vary by location, and the payment schedule means the tax bill may reflect an earlier assessment period. The Iowa Department of Revenue's property tax overview is a useful starting point. Verify a specific property's taxes with the relevant county and your lender.
5. Leave room for moving and homeownership expenses
Set aside money for moving supplies, utility deposits, furnishings and the repairs that can come with any home. If you're comparing an older property with a newer one, look at the age and condition of the roof, HVAC system, plumbing and major appliances. Keep an emergency cushion rather than using every dollar of savings at closing.
6. Ask about possible closing-cost credits
Depending on the offer, financing guidelines and negotiations, a seller may agree to contribute toward certain closing costs. A lender may also offer credits, sometimes in exchange for a different interest rate. These credits can be useful, but they're not guaranteed or automatically free. Compare the overall financial impact with your lender.
A practical first-time buyer checklist
- Decide what monthly payment fits your household budget.
- Get a lender's estimate covering down payment and closing costs.
- Identify the funds you want to preserve for emergencies.
- Compare property taxes, insurance estimates and HOA dues for each home.
- Ask your Realtor about inspection options and likely timing.
- Review your Loan Estimate and final closing figures carefully.
Buying a home in Central Iowa?
Welcome Home Iowa helps first-time buyers make a plan, narrow down neighborhoods, tour properties and understand each step of the process. We serve buyers throughout the Des Moines metro and nearby communities, with guidance available in English and Spanish.
This article is general educational information, not mortgage, tax or legal advice. Costs and loan eligibility depend on your circumstances and may change. Ask your lender, tax professional or closing attorney about your specific transaction.