Is Your New Home Actually Affordable? The Hidden Cost Too Many First-Time Home Buyers Forget
The process of buying a home involves so many different expenses - including a few surprising ones that first-time home buyers often forget to budget for.
If you're hoping to buy a home in the near future, read on for insights from a home loan expert on the No. 1 hidden cost many new home owners forget about and how you can prepare yourself for it.
First-Time Home Buyers Often Don't Budget for Skyrocketing Insurance Costs
According to Kathy Herig, the SVP of Enterprise Credit Policy at mortgage lending company loanDepot, insurance is one of the sneakiest costs involved in home ownership.
"Your down payment and monthly mortgage are just one piece of the puzzle when it comes to homeownership," she said in an email sent to Dengarden. "Insurance, in particular, has become one of the fastest-rising and most variable expenses for homeowners, making it critical to plan beyond today's numbers."
She's primarily referring to homeowners insurance, which is typically paid either monthly or yearly. The price can vary widely depending on the size of your home and your assets: per loanDepot, the average U.S. homeowner pays about $1,272 per year, though NerdWallet reported that the average cost is closer to $2,490 a year.
There's also title insurance, which protects the mortgage lender, the homeowner and their future heirs from any past owner trying to claim ownership of the home in the future. Home buyers typically pay title insurance as a one-time fee as part of their closing costs, though in some states, the seller pays this fee, per First American.
The average title insurance payment is 0.42 percent of the home's cost - so on a $1 million home, it would cost around $4,200.
There Are a Few Other Hidden Home Ownership Fees, and It's Vital to Budget for Them
Other monthly and yearly fees like can add up, too. "Ongoing costs like utilities, property taxes, insurance, and maintenance don't just add up - they're often increasing year over year," said Herig.
So how can a first-time home buyer make sure these hidden costs don't send them into debt? The most important thing you can do is "build flexibility into your budget from the start - not just for the unexpected, but for the reality that many of these costs will likely rise over time," according to Herig.
"Factoring in gradual increases for things like insurance premiums, property taxes, and ongoing upkeep can help you stay ahead rather than reacting after the fact," she added. "Ultimately, the goal is to make sure your home is something you can afford not just at closing, but as costs evolve."
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This story was originally published June 6, 2026 at 7:34 AM.