Why Saving for a Down Payment Is Not Enough When Buying a Home

By Burt Tsuei

A Realtor with 20+ Years of proven track record of high quality service in the San Mateo County/Bay Area. A lifelong Bay Area resident, Burt works with buyers and sellers from Pacifica to South San Francisco to Redwood City and beyond.

Saving for a down payment is a massive accomplishment. It takes discipline, sacrifice, and focus, especially in a market like San Mateo County, where purchase prices can be high, and competition can still move quickly.

Here’s the part many buyers miss. The down payment is only the start. If you want your new home to feel exciting rather than stressful, you need a plan for the costs that arise before, during, and after closing day.

Below is the savings framework we recommend so you feel prepared, protected, and confident once you get the keys.

1. Closing costs. Beyond your down payment, you will also pay closing costs. In most cases, that is about 2% to 5% of the purchase price.

On a $1,000,000 home, that is roughly $20,000 to $50,000.

Closing costs can include lender fees, title insurance, appraisal fees, and prepaid items like taxes and insurance. Planning for this early keeps you out of the last-minute scramble at the closing table and helps you make decisions calmly.

2. Emergency fund. Life does not pause after you buy a home. Cars break. Jobs change. Appliances fail. That is why most experts still recommend keeping three to six months of living expenses available in an emergency fund, even after your purchase.

In the latest Bankrate emergency savings report referenced in this video, only about 30% of Americans could cover a $1,000 unexpected expense from savings, and about 47% have enough liquidity to handle it comfortably. Without a buffer, one surprise can snowball quickly.

A home is a long-term win. The emergency fund is what helps you keep it that way.

3. Move-in costs and ongoing maintenance. Moving costs add up faster than most people expect. Truck rentals, movers, boxes, supplies, and sometimes storage can hit your budget immediately. Then come the first home purchases that feel small, but stack up, such as new locks, window treatments, paint, and minor repairs.

After that, the real long-term factor is maintenance.

A common rule of thumb is 1% to 4% of your home’s value per year for maintenance and repairs.

On a $1,000,000 home, that is $10,000 to $40,000 per year.

Setting this aside monthly helps you stay ready for the big-ticket moments, like when the HVAC fails or the roof needs attention. Even if you do not spend it right away, the reserve keeps you in control.

4. Your personal comfort zone. Not everyone needs the same cushion.

If your income is stable and predictable, a smaller reserve might feel fine. If your income is commission-based, freelance, or variable, a larger buffer can bring real peace of mind. The numbers matter, but so does your ability to sleep well at night.

The right amount is the amount that lets you enjoy your home without constant worry.

Quick savings targets after your down payment. Here are the simple targets to remember:

• 2% to 5% of the purchase price for closing costs
• 3 to 6 months of living expenses for emergencies
• 1% to 4% of the home value per year for maintenance
• Plus move-in extras like furniture, decor, and small upgrades

Buying a home should feel exciting, not exhausting. With solid planning, you cover the surprises, protect your finances, and actually enjoy the home you worked so hard to buy.

If you’re thinking about buying in San Mateo County, or you know someone who is, reach out. Call or text 650-274-3598, email burt@realestateburt.com, or visit realestateburt.com. We can run the numbers for your specific situation, spot ways to save, and make sure you’re set up for success.