If you are planning to buy a home in Atlanta, one of the first questions is probably:
How much money do I actually need?
The answer may be less — or more — than you expect.
Your total cash requirement is not simply your down payment.
Atlanta home buyers should plan for several different expenses, including:
- Down payment
- Closing costs
- Earnest money
- Inspections
- Appraisal or lender-related expenses
- Prepaid taxes and insurance
- Initial reserves
- Moving expenses
Let’s break it down.
You Do Not Automatically Need 20% Down
A 20% down payment has benefits, but it is not required for every mortgage.
Depending on your qualifications, options can include:
Conventional Financing
Some eligible conventional buyers may qualify for down payments beginning around 3%.
Putting less than 20% down may result in private mortgage insurance depending on the loan.
FHA Financing
Eligible FHA borrowers can purchase with as little as 3.5% down.
FHA financing also includes mortgage-insurance requirements that should be considered when comparing monthly payments.
VA Financing
Eligible veterans and service members may qualify for VA financing with no required down payment, subject to the loan, lender and buyer’s eligibility.
USDA Financing
Eligible buyers purchasing qualifying properties may have access to USDA financing that does not require a traditional down payment.
USDA eligibility depends in part on household income and property location.
Down-Payment Assistance
Georgia and City of Atlanta programs can potentially reduce the amount an eligible buyer must bring toward the down payment or closing expenses.
That is why a buyer should review financing before deciding how long they need to save.
What Are Buyer Closing Costs?
Your down payment and your closing costs are two different things.
The Consumer Financial Protection Bureau recommends using approximately 2%–5% of the home’s purchase price as an early estimate for closing costs, although the actual amount can vary considerably.
Closing costs can include items such as:
- Lender charges
- Appraisal
- Title-related expenses
- Attorney and settlement-related expenses
- Recording charges
- Prepaid homeowners insurance
- Property-tax escrows
- Prepaid interest
- Mortgage-related charges
Your lender’s Loan Estimate will give you a much better projection after you apply.
Example: Buying a $300,000 Atlanta Home
Suppose you purchase for $300,000 using financing requiring a 3.5% down payment.
Estimated down payment: $10,500
Using a rough 2%–5% estimate:
Estimated closing costs: $6,000–$15,000
That produces a preliminary upfront estimate of approximately:
$16,500–$25,500
before considering assistance, seller credits, lender credits, earnest money already paid or other transaction-specific adjustments.
Example: Buying a $400,000 Atlanta Home
At a $400,000 purchase price with 3.5% down:
Estimated down payment: $14,000
Estimated closing costs at 2%–5%: $8,000–$20,000
Preliminary total: $22,000–$34,000
Again, this is not a quote.
The actual figure could be considerably different depending on financing and negotiations.
Example: Buying a $500,000 Atlanta Home
At $500,000 with 3.5% down:
Estimated down payment: $17,500
Estimated closing costs at 2%–5%: $10,000–$25,000
Preliminary total: $27,500–$42,500
The point of these examples is not that every Atlanta buyer needs this amount.
It is to show why simply multiplying the home price by a down-payment percentage does not give you the full picture.
Don’t Forget Earnest Money
Earnest money is money deposited after going under contract as evidence of the buyer’s good faith in the transaction.
The amount is negotiated in the purchase agreement.
If the transaction closes as agreed, properly credited earnest money is generally applied toward amounts due in the transaction.
In other words, do not automatically add your earnest money on top of your final cash-to-close estimate twice.
You simply need to make sure those funds are available earlier in the transaction.
Budget for the Inspection Too
A home inspection occurs before closing and generally must be paid for separately.
Depending on the property, you may also choose additional evaluations involving:
- Termites
- Sewer
- Septic
- Radon
- Mold
- Structural issues
- HVAC
- Specialty systems
Do not spend every available dollar on your down payment and leave nothing for investigating the home you are purchasing.
Can the Seller Pay Some of Your Closing Costs?
Potentially.
A purchase contract may include a negotiated seller contribution toward eligible buyer expenses.
Whether a seller will agree depends on factors such as:
- Current market conditions
- Property demand
- Offer price
- Competing offers
- Seller motivation
- Loan guidelines
Seller concessions can sometimes be more valuable to a cash-conscious buyer than negotiating the same amount off the purchase price.
For example, a buyer may care more about reducing the amount due at closing than lowering a monthly mortgage payment by a relatively small amount.
This is something your agent and lender can evaluate together.
Can Down-Payment Assistance Lower the Amount You Need?
Yes, for eligible buyers.
Georgia Dream currently offers several homebuyer assistance options.
Qualified Atlanta buyers may also have access to programs administered by Invest Atlanta.
Certain eligible buyers purchasing in specified Atlanta BeltLine areas may currently qualify for as much as $20,000–$30,000 through the BeltLine Mortgage Assistance Program.
These programs have specific income, credit, location, financing and occupancy requirements.
Assistance should be evaluated before writing an offer whenever possible.
How Much Should You Keep in Savings After Closing?
Avoid planning to spend your final dollar on closing day.
Homeownership introduces expenses renters may not have previously handled directly.
Consider keeping reserves for:
- Repairs
- Maintenance
- Appliances
- Furnishings
- Moving
- Utility deposits
- HOA expenses
- Insurance deductibles
- Unexpected emergencies
The CFPB also recommends thinking about an emergency cushion instead of directing every available dollar toward the home purchase.
The Best Way to Calculate Your Number
Instead of choosing an arbitrary savings target, have a lender create scenarios.
For example:
Scenario A
$350,000 home
3% conventional down
No assistance
Scenario B
$350,000 home
FHA financing
Seller contribution
Scenario C
$350,000 home
Eligible down-payment-assistance program
Then compare:
- Cash to close
- Interest rate
- Monthly principal and interest
- Mortgage insurance
- Property taxes
- Homeowners insurance
- HOA
- Total monthly payment
Now you can make a decision based on actual numbers.
Planning to Buy a Home in Metro Atlanta?
FASS Real Estate Services – Georgia helps buyers create a realistic purchase strategy before beginning the home search.
We can help you identify your target areas, determine what properties fit your budget and coordinate with financing professionals to understand your available options.
You do not have to wait until you have 20% saved to begin asking questions.
