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Be prepared! The costs of homeownership extend beyond the down payment

By Julie Tramonte

July 2026

As a soon-to-be new homeowner, your financial focus has probably been on saving for the down payment. And now that you’ve got a stash of cash and are about to close on your loan, the question is: Should you use all of it for the down payment? Or should you put some of it aside just in case?

You may want to take some things into consideration before answering that.

Just when you think you’re in the home stretch: Surprise!

It could seem like a no-brainer to put down as much money as possible, but there are some good reasons to consider making a smaller down payment and keeping some of your money for a rainy day – even if you have a 20% down payment. The biggest reason is simple: Stuff happens. It’s always good to have a little financial wiggle room so you can comfortably pay for unexpected situations as they arise.

For example, the house next door to mine went up for sale and sold quickly to a couple from out of state. Before the moving van arrived, we were hit with a monster winter storm that knocked the fence down between our houses. I kept thinking, “These poor people, they haven’t even moved in yet and now they have to deal with this.”

Be ready for the unexpected – and the expected

Here are some things you may want to build a financial buffer for: 

Increased property taxes

Home values tend to increase over time. With that often comes a higher property assessment and corresponding higher taxes.

Bad news: Your property tax may increase. Good news: Your home is worth more.

Home repairs and maintenance

One day, you may turn on the faucet and won’t be able to turn it off. Or the air conditioner stops cooling. Or the garage door won’t open.

Bad news: You can’t just call the super. You’ll have to open up your wallet. Good news: You don’t have to wait for the super to fix it. And if you have a just-in-case savings account, the expense doesn’t hurt as much.

Higher homeowners insurance premiums

Since your home is one of the biggest investments you’ll ever make, you’ll want to insure it (and your lender requires it). Unfortunately, homeowners insurance premiums have increased significantly in certain high-risk zip codes.

Bad news: This is a cost that can’t be avoided. Good news: You’ll have peace of mind knowing you’ll be covered if something happens to your home. Also, if your home is in a high-risk area, you’re probably living in a very desirable location, like somewhere on the coast. 

Home improvements

Now that you have your own place, you can make whatever improvements you want. But it’ll cost you. You’ll be amazed at how a fresh coat of paint can suddenly make the carpet look so dingy that you’ll want to pull it up and refinish the hardwood floors, and then that ugly vanity in the bathroom… 

Bad news: Home improvements can be expensive and it’s hard to avoid scope creep. Good news: Isn’t this what you’ve been waiting for?!! It’s fun. It’s pretty. And it doesn’t have to be done all at once.  

Yard maintenance

Curb appeal doesn’t just happen. You either pay for a service or do it yourself – and that requires tools and equipment, like mowers, pruners, rakes, snowblowers, etc. Not to mention patio furniture from which to admire your yardwork! 

Bad news: None of that is cheap. Good news: Most of these are one-time investments, and you can borrow some tools in the meantime. Plus, you’ll enjoy it every time you drive up to your house.

Entertainment

Once you buy a new house, everyone is going to want to see it and celebrate with you.

Bad news: Drinks and snacks add up. Good news: Pride of ownership, music as loud as you want and house-warming presents! 

A financial option to consider

There will be plenty of expenses that pop up after you close on your home. Not all of them will be house-related. Some will be life-related. If you don’t have any reserve funds, you may want to talk to your lender about using private mortgage insurance so you can put down less than 20% on your house (as little as 3%!) and keep more cash in savings for the other expenses that can arise.

Take it from a homeowner who had to replace her air conditioner and garage door just a few months after moving in.

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Julie

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Julie Tramonte is a writer who joined MGIC in 2018. Prior to flying the coop, she wrote for a mattress company, a manufacturer and advertising agencies. She’s obsessed with reading, traveling, tennis and rearranging furniture. Mother of 2 beautiful, adult daughters. Empty nester who recently downsized. Her guilty pleasures are doughnuts and the Kardashians (don’t tell anyone).
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