Buying your first home is an exciting milestone, but it’s important to go into the process with your eyes open to the potential hidden costs of homeownership. Many first-time buyers focus solely on the mortgage payment and down payment, failing to consider the myriad other expenses that can quickly add up. Understanding these hidden costs beforehand can help you avoid financial strain and ensure a smoother transition into homeownership.

One often-overlooked cost is property taxes, which can vary widely depending on your location and the value of your home. These taxes are typically paid annually or semi-annually and can amount to several thousand dollars. Another surprise expense for new homeowners is the cost of homeowners insurance. This type of insurance is typically more expensive than renters insurance and may include additional coverage requirements, such as flood or earthquake insurance, depending on your location.

Utilities are another area where costs can creep up unexpectedly. As a homeowner, you’ll be responsible for paying all the utilities, including water, electricity, gas, trash collection, and possibly even sewer and stormwater fees. These costs can vary depending on the size and energy efficiency of your home, so be sure to factor them into your budget.

Additionally, homeowners need to be prepared for the cost of maintenance and repairs, which can pop up unexpectedly and often cost a pretty penny. From fixing a leaky roof to repairing a broken appliance, these expenses can quickly eat into your savings if you’re not prepared. It’s generally recommended to set aside 1% to 3% of your home’s purchase price each year for maintenance and repairs.

Another hidden cost of homeownership is the various closing costs and fees associated with obtaining a mortgage. These can include origination fees, appraisal fees, title insurance, and more, and they typically amount to 2% to 5% of the loan value. While some of these fees may be negotiable or rolled into your mortgage, it’s important to understand these additional costs upfront.

Furthermore, don’t forget to factor in moving expenses, which can include everything from packing materials and rental trucks to professional moving services. This can set you back a few hundred to a few thousand dollars, depending on the distance and complexity of the move.

First-time homeowners may also be surprised by the cost of HOA (homeowners association) fees, which are common in condominium and planned communities. These fees cover the maintenance and upkeep of common areas and amenities and can range from a few dozen to several hundred dollars per month.

Finally, there are the opportunity costs associated with homeownership. As a renter, you have more flexibility to move for a job or lifestyle change. As a homeowner, you may feel more financially constrained to stay put, at least until you build up enough equity in your home.