Building Your Home Buying Budget: The Complete Cash and Monthly Cost Guide

You've been pre-approved for a $900,000 home loan. Does that mean you can afford a $900,000 home?

Not necessarily. Pre-approval tells you what a lender will give you, not what you can comfortably afford. In Greater Seattle's expensive market, the difference between what you qualify for and what you should actually spend can be $100,000-200,000.

This article will help you build a realistic budget that covers both the cash you need upfront and the monthly costs you'll face as a homeowner, with real Seattle examples throughout.

Part 1: Cash You Need Upfront
Part 2: Monthly Costs of Homeownership
Part 3: How Much Can You Actually Afford?
Part 4: Budget Worksheets
Part 5: Common Budget Mistakes
Summary: Key Takeaways
Next Steps

Part 1: Cash You Need Upfront

Most buyers focus on the down payment and forget about the other cash requirements. Here's the complete picture.

Down Payment

Minimum requirements by loan type:

Conventional: 3-5% minimum (20% to avoid PMI)
FHA: 3.5% minimum
VA: 0% (for eligible veterans)
Jumbo: 10-20% minimum (for loans over $806,500 in King County, 2025)

Seattle median home ($825,000) down payment examples:

3.5% (FHA): $28,875
5%: $41,250
10%: $82,500
20%: $165,000

Why 20% matters:

No PMI (saves $200-400/month)
Better interest rates (0.25-0.5% lower)
Stronger offers (sellers prefer larger down payments)
More equity cushion if market dips

Important: Putting down less than 10% in Seattle's market is risky. If prices drop 5-10%, you could owe more than the home is worth.

Closing Costs

Closing costs in Seattle typically run $15,000-20,000 for a median-priced home. These are due at closing and cannot be financed (except in rare cases).

Breakdown for $825,000 home purchase:

Lender fees: $2,000-3,000

Origination fee: $1,000-1,500 (0.5-1% of loan)
Underwriting: $500-800
Processing: $400-600
Credit report: $50-100

Title and escrow: $2,500-4,000

Title insurance (owner's policy): $1,500-2,500
Escrow fee: $1,000-1,500 (split with seller in WA)
Recording fees: $200-300 (King County)
Notary: $100-200

Prepaid items: $3,000-5,000

Property taxes (2-6 months): $1,400-4,100
Homeowners insurance (1 year): $1,500-2,000
Prepaid interest: $500-1,500 (depends on closing date)

Inspection and appraisal: $1,800-2,800

Home inspection: $500-700
Sewer scope: $300-500 (highly recommended in Seattle)
Radon test: $150-250 (optional, less common in Seattle)
Appraisal: ~$850

Other costs: $500-1,500

HOA transfer fee: $200-500 (if applicable)
Survey: $400-800 (if required)
Pest inspection: $100-200 (if required)

Total closing costs: $15,000-20,000

Get your Loan Estimate within 3 days of applying. Compare at least 3 lenders—closing costs can vary by $2,000-3,000.

Earnest Money

Earnest money is a deposit showing you're serious about buying. It's held in escrow and applied to your down payment at closing.

Seattle typical amounts:

1-3% of purchase price
$8,000-25,000 for median-priced home
Due within 2-3 days of offer acceptance

Important: You get this back if you cancel within contingency periods (inspection, financing, appraisal). You lose it if you cancel without valid reason.

Moving and Immediate Costs

Moving: $1,500-3,000

Professional movers (local): $1,200-2,500
Truck rental (DIY): $300-500
Packing supplies: $200-300
Storage (if needed): $150-300/month

Immediate home needs: $5,000-15,000

Appliances (if not included): $2,000-5,000
Window coverings: $1,000-3,000
Lawn mower/tools: $500-1,500
Minor repairs: $1,000-3,000
Deep cleaning: $300-600
Locksmith (rekey): $150-300

Utility deposits: $200-500

Electricity: $100-200
Gas: $50-100
Water/sewer: $50-100
Internet setup: $100-200

Emergency Reserve

Keep 3-6 months of expenses in savings AFTER buying. This protects you if:

You lose your job
Major repair needed (roof, HVAC, foundation)
Property taxes increase
HOA special assessment

Example for $825,000 home:

Monthly expenses: $6,000
6-month reserve: $36,000

Total Cash Needed Summary

For $825,000 Seattle home with 10% down:

Down payment: $82,500
Closing costs: $17,500 (average)
Earnest money: $16,500 (returned at closing, but need upfront)
Moving and immediate: $8,000
Emergency reserve: $36,000
Total cash needed: $144,000
Cash needed at closing: $100,000 (down payment + closing costs)

For $825,000 Seattle home with 20% down:

Down payment: $165,000
Closing costs: $17,500
Earnest money: $16,500
Moving and immediate: $8,000
Emergency reserve: $36,000
Total cash needed: $227,000
Cash needed at closing: $182,500

Important: If you only have $100,000 saved, you can't afford an $825,000 home with 10% down. You'd have no emergency fund left.

Part 2: Monthly Costs of Homeownership

Your mortgage payment is just the beginning. Here are all the monthly costs you'll face.

Principal and Interest (P&I)

This is your actual loan payment.

$825,000 home with 10% down ($742,500 loan):

6.5% rate, 30-year: $4,690/month
7.0% rate, 30-year: $4,940/month
6.5% rate, 15-year: $6,470/month

$825,000 home with 20% down ($660,000 loan):

6.5% rate, 30-year: $4,170/month
7.0% rate, 30-year: $4,390/month
6.5% rate, 15-year: $5,750/month

Rate impact: Every 0.5% rate increase adds roughly $200/month to payment on a $700,000 loan.

Private Mortgage Insurance (PMI)

Required if you put down less than 20%.

Cost: 0.5-1.5% of loan amount annually

$742,500 loan: $310-930/month
Typical: $400-500/month for good credit

How to remove PMI:

Automatically removed at 78% loan-to-value
Request removal at 80% loan-to-value
Refinance when you have 20% equity

PMI on conventional loans is removable. FHA mortgage insurance is permanent (unless you put 10%+ down). This is why conventional loans are usually better than FHA in Seattle's market.

Property Taxes

Washington has no state income tax, but property taxes are significant.

King County rates (2025):

Typical: 0.87-0.88% of assessed value
Seattle: ~0.87%
Bellevue: ~0.88%
Redmond: ~0.88%

Monthly cost for $825,000 home:

King County: $600-605/month
Snohomish County: $620-690/month
Pierce County: $660-730/month

Important: Assessed value may differ from purchase price. Check King County Assessor website for actual assessed value.

Tax increases:

Limited to 1% per year in Washington (unless you remodel)
Levies can increase taxes beyond 1%
New construction assessed at full market value

Homeowners Insurance

Protects your home and belongings.

Seattle typical costs (2025):

Single-family home: $1,500-2,000/year ($125-165/month)
Townhome: $1,200-1,800/year ($100-150/month)
Condo (HO-6): $400-800/year ($35-65/month)

Factors affecting cost:

Home age (older = higher)
Replacement cost (not market value)
Deductible ($1,000-5,000)
Coverage limits
Claims history

Additional coverage to consider:

Earthquake: $800-1,500/year (separate policy)
Sewer backup: $50-100/year (add-on)
Umbrella liability: $200-400/year (recommended)

Shop insurance before closing. Get quotes from 3-5 companies. Rates vary by $500-1,000/year for same coverage.

HOA Fees

If buying a condo or townhome, HOA fees are mandatory.

Seattle area typical fees (2025):

Downtown Seattle condo: $500-800/month
Neighborhood condo: $300-500/month
Townhome: $200-400/month
Single-family HOA: $50-150/month

What HOA fees cover:

Exterior maintenance (roof, siding, paint)
Common area maintenance
Water/sewer/garbage (often included)
Amenities (pool, gym, parking)
Reserve fund for big repairs
Insurance (building exterior)

Red flags:

Fees increasing 10%+ annually
Reserve fund under 30% funded
Recent or pending special assessments
Deferred maintenance visible

Important: HOA fees are forever and typically increase 3-5% annually. A $400/month fee becomes $520/month in 10 years.

Utilities

Homeowners typically pay more than renters.

Seattle area monthly costs (2025):

Electricity (Seattle City Light, PSE):

1,000 sqft condo: $80-120
1,500 sqft townhome: $100-150
2,000 sqft house: $120-180
2,500+ sqft house: $150-250

Natural gas (PSE):

Heating (winter): $80-150
Heating (summer): $20-40
Average year-round: $60-100

Water/sewer/garbage:

Seattle: $150-200/month
Eastside: $100-150/month
Often included in condo HOA fees

Internet:

Basic (100 Mbps): $50-70
Fast (500 Mbps): $70-90
Gigabit: $90-120

Total utilities: $300-500/month for typical home (more in winter, less in summer)

Maintenance and Repairs

The 1% rule: Budget 1% of home value annually for maintenance.

$825,000 home: $8,250/year = $690/month

What this covers:

Routine maintenance (HVAC service, gutter cleaning)
Minor repairs (leaky faucet, broken appliance)
Seasonal needs (furnace filter, yard care)
Unexpected issues (water heater failure, roof leak)

PNW-specific maintenance:

Gutter cleaning: $150-300 (2x/year)
Moss treatment: $200-400/year
Pressure washing: $300-600/year
Moisture inspection: $200-400/year

Major system lifespans:

Roof: 20-30 years ($15,000-25,000 to replace)
HVAC: 15-20 years ($8,000-15,000 to replace)
Water heater: 10-15 years ($1,500-3,000 to replace)
Appliances: 10-15 years ($500-2,000 each)

Set aside the full 1% even if you don't spend it. When the roof needs replacing in year 10, you'll have $82,500 saved.

Total Monthly Cost Examples

$825,000 home, 10% down, King County:

Mortgage (P&I): $4,690
PMI: $450
Property taxes: $605
Insurance: $150
HOA: $0 (single-family)
Utilities: $400
Maintenance: $690
Total: $6,985/month

$825,000 home, 20% down, King County:

Mortgage (P&I): $4,170
PMI: $0
Property taxes: $605
Insurance: $150
HOA: $0
Utilities: $400
Maintenance: $690
Total: $6,015/month

$750,000 condo, 20% down, Seattle:

Mortgage (P&I): $3,790
PMI: $0
Property taxes: $545
Insurance (HO-6): $50
HOA: $450
Utilities: $150 (electric only)
Maintenance: $0 (HOA covers)
Total: $4,985/month

Part 3: How Much Can You Actually Afford?

Lenders use debt-to-income (DTI) ratio. You should use a more conservative approach.

Lender's Calculation (Maximum Approval)

Front-end ratio: Housing costs ≤ 28% of gross income Back-end ratio: All debts ≤ 43% of gross income

Example: $150,000 annual income ($12,500/month gross)

Maximum housing: $3,500/month (28%)
Maximum total debt: $5,375/month (43%)

If you have $500/month in other debts:

Maximum housing: $4,875/month ($5,375 - $500)

This qualifies you for roughly $900,000 home (with 10% down, 6.5% rate)

Your Calculation (Comfortable Affordability)

Conservative approach: Housing costs ≤ 25% of take-home pay

Example: $150,000 annual income

Take-home (after taxes): ~$105,000/year = $8,750/month
Maximum housing: $2,190/month (25%)

This suggests $400,000-500,000 home - much less than lender approval!

Why the difference?

Lenders use gross income; you live on net income
Lenders don't account for retirement savings, kids' expenses, lifestyle
Lenders maximize their profit; you need comfortable living

Better approach: The 50/30/20 rule

50% of take-home for needs (housing, food, utilities, insurance)
30% for wants (dining, entertainment, hobbies)
20% for savings (retirement, emergency fund, investments)

Example: $150,000 income, $8,750 take-home

Needs budget: $4,375
Housing (within needs): $2,500-3,000
This suggests $600,000-700,000 home

Real Affordability Examples

Scenario 1: Single tech worker, $180,000 income

Gross: $15,000/month
Take-home: ~$10,500/month
Lender approval: ~$1,000,000 home
Comfortable budget: $2,625/month (25% of take-home)
Realistic price: $600,000-700,000 home

Scenario 2: Dual income couple, $250,000 combined

Gross: $20,833/month
Take-home: ~$14,500/month
Lender approval: ~$1,400,000 home
Comfortable budget: $3,625/month (25% of take-home)
Realistic price: $850,000-950,000 home

Scenario 3: Family with kids, $200,000 income

Gross: $16,667/month
Take-home: ~$11,500/month
Other expenses: $2,000/month (childcare, activities)
Lender approval: ~$1,100,000 home
Comfortable budget: $2,500/month (after kids' expenses)
Realistic price: $600,000-700,000 home

Important: These are guidelines. Your situation is unique. Consider job stability, other financial goals, lifestyle preferences, risk tolerance, and future income changes.

Part 4: Budget Worksheets

Cash Needed Worksheet

Your target home price: $________

Down payment (___%): $________ Closing costs (2-2.5%): $________ Moving and immediate: $________ Emergency reserve (6 months): $________ Total cash needed: $________

Your current savings: $________ Gap to close: $________

Monthly Cost Worksheet

Your target home price: $________ Down payment: $________ Loan amount: $________ Interest rate: ____%

Principal & Interest: $________ PMI (if <20% down): $________ Property taxes (0.87%): $________ Insurance: $________ HOA fees: $________ Utilities: $________ Maintenance (1%): $________ Total monthly cost: $________

Your monthly take-home: $________ 25% of take-home: $________ Can you afford this home? Yes / No

Affordability Calculator

Your annual income: $________ Monthly gross income: $________ Monthly take-home (70%): $________

Conservative budget (25% of take-home): $________ Moderate budget (30% of take-home): $________ Aggressive budget (35% of take-home): $________

Recommended home price range: $________ - $________

Part 5: Common Budget Mistakes

Mistake 1: Maxing Out Pre-Approval

The trap: Lender approves you for $1,000,000. You buy a $1,000,000 home.

The problem: You're house-poor. No money for vacations, dining out, hobbies, retirement savings, kids' activities, or emergency repairs.

The fix: Buy 20-30% below pre-approval amount.

Mistake 2: Forgetting About Taxes

The trap: You calculate affordability using gross income.

The problem: You don't live on gross income. Taxes take 25-35%.

The fix: Use take-home pay for all calculations.

Mistake 3: Ignoring Maintenance

The trap: You budget for mortgage, taxes, insurance. That's it.

The problem: Water heater fails ($2,000). Roof leaks ($5,000). Furnace dies ($10,000).

The fix: Budget 1% of home value annually. Set aside monthly.

Mistake 4: Underestimating Utilities

The trap: You budget $150/month for utilities (what you pay renting).

The problem: Homeowners pay $300-500/month in Seattle.

The fix: Ask seller for utility bills. Budget high.

Mistake 5: Depleting Savings

The trap: You use every dollar for down payment and closing costs.

The problem: No emergency fund. First repair forces you into debt.

The fix: Keep 6 months expenses in savings AFTER buying.

Mistake 6: Ignoring Future Changes

The trap: You can afford it now, so you buy.

The problem: Planning kids (childcare costs $1,500-2,500/month), spouse wants to stay home, career change to lower-paying job, or aging parents need support.

The fix: Budget for 5-year future, not just today.

Summary: Key Takeaways

Cash needed is 25-30% more than down payment—don't forget closing costs, moving, and reserves
Monthly costs are $1,500-2,000 beyond mortgage—taxes, insurance, maintenance, utilities add up
Use 25% of take-home pay as maximum housing cost, not lender's 28% of gross
Keep 6 months expenses in savings after buying for emergencies
Budget 1% of home value annually for maintenance and repairs
Buy 20-30% below pre-approval to avoid being house-poor
Seattle-specific costs: Property taxes ~0.87%, earthquake insurance optional, HOA fees $200-800/month

Next Steps

Calculate your take-home pay accurately (check recent paystubs)
Determine comfortable housing budget (25% of take-home)
Work backwards to home price using our monthly cost worksheet
Calculate total cash needed including reserves
Compare to your savings—can you afford your target price?
Get pre-approved but remember it's a maximum, not a target
Read our Loan Types Explained article to understand financing options

Related articles:

This article provides general guidance and should not be considered financial advice. Your budget depends on your unique situation. Consult with a financial advisor and mortgage lender for personalized recommendations.