One of the most common reasons renters put off buying a home is simple:

“I don't have enough money saved.”

But how much money do you actually need to buy a home in Clarksville, Tennessee?

The answer may be very different from what you think.

Buying a home does involve upfront expenses, but the amount varies considerably depending on the home, your financing, your qualifications and whether you qualify for programs that can help with some of those costs.

Before assuming you need tens of thousands of dollars in the bank, it helps to understand where the money actually goes.

The Down Payment

This is usually the first expense people think about.

Many renters still believe they need a 20% down payment to purchase a home. While putting 20% down may make sense for some buyers, it is certainly not the only way to purchase a home.

Depending on your qualifications and loan program, your required down payment could be considerably smaller. Some qualified buyers may even have access to financing that does not require a down payment.

The important thing is not to assume which loan you qualify for. A lender can review your individual situation and explain your options.

Closing Costs

The down payment isn't the only expense involved in purchasing a home.

There are also closing costs associated with the transaction. These can include lender fees, title-related expenses, prepaid taxes and insurance, and other costs associated with obtaining the loan and transferring ownership.

The amount varies from one transaction to another.

Depending on the loan program and the terms negotiated in the purchase agreement, there may also be opportunities for seller concessions or assistance programs that help reduce some of the buyer's out-of-pocket expenses.

Earnest Money

When you make an offer on a home, you may include earnest money with your contract.

Think of earnest money as money demonstrating that you're serious about purchasing the property.

The amount can vary, and it is generally credited toward the transaction at closing if the purchase proceeds as agreed.

Your Realtor can explain how earnest money works before you submit an offer so you understand exactly what you're agreeing to.

Home Inspection

A home inspection is another expense buyers should prepare for.

While an inspection is not the same thing as a down payment or closing cost, I encourage buyers to budget for one. A professional home inspection can provide valuable information about the condition of the property before you complete the purchase.

The cost will depend on the property and the inspection services you choose.

What About the Appraisal?

If you're financing your purchase, your lender will typically require an appraisal to help determine the property's value.

How and when the appraisal fee is collected can vary by lender and loan program, so this is another expense you should discuss when reviewing your estimated costs.

Down-Payment Assistance May Change the Picture

This is where many Clarksville renters are surprised.

There are programs designed to help qualified buyers with down payments and/or closing costs.

Tennessee has homebuyer programs offering assistance to qualified borrowers, and the City of Clarksville also has a First-Time Homebuyers Program for eligible buyers purchasing within Clarksville city limits.

Every program has its own requirements, and assistance is not guaranteed. Income limits, credit requirements, property requirements, available funding and other qualifications may apply.

But if lack of savings is the main reason you've assumed you can't purchase a home, it's worth finding out whether assistance may be available before automatically signing another lease.

What About VA and Other Low-Down-Payment Loans?

Clarksville has a large military and veteran community, which makes VA financing especially important in our local market.

Eligible veterans, service members and certain surviving spouses may qualify for a VA-backed purchase loan with no required down payment when program requirements are met.

Other financing programs may offer low-down-payment options as well.

Again, the right loan depends on the buyer. That's why I prefer connecting someone with a knowledgeable lender rather than telling them which program they should use before their finances have even been reviewed.

So How Much Money Do YOU Need?

That's the real question.

It may be $5,000.

It may be $15,000.

It may be considerably more—or your available financing and assistance options may mean you need much less than you expected.

There isn't one number that applies to every Clarksville homebuyer.

And that's exactly the point.

Don't decide that you can't afford to buy a home based on a number you heard from a friend, saw online or calculated using a generic mortgage calculator.

Find out what your number is.

If you're currently renting in Clarksville and you're thinking about buying a home—whether your lease expires next month or next year—we can start by figuring out where you stand.

You don't have to be ready to buy a house today.

Sometimes the first step toward homeownership is simply finding out what it would take to get there.

Robert Spencer, REALTOR®
Weichert, Realtors® – Home Pros
Clarksville, Tennessee

Cell: 865-591-4813 (Preferred)
Office: 931-552-1415
Email: rspencer@realtracs.com