Why It’s Important to Have a Nest Egg Before Buying a Home

Buying a home is one of the biggest financial decisions you’ll ever make. While saving for a down payment is a crucial step, having a financial cushion—or a nest egg—is just as important. Unexpected costs can arise before, during, and after the home-buying process, and being financially prepared can help you navigate them with confidence. Here’s why having a nest egg is essential before purchasing a home.

1. Covering Upfront Costs Beyond the Down Payment

Most buyers focus on saving for their down payment, but there are several other upfront costs to consider, including:

• Closing Costs – Typically ranging from 2% to 5% of the home’s purchase price, these include lender fees, title insurance, and appraisal costs.

• Home Inspections – A crucial step before buying, home inspections can cost a few hundred dollars but save you from expensive surprises.

• Moving Expenses – Whether you’re hiring movers or renting a truck, relocating comes with its own costs.

Having a nest egg ensures you can handle these expenses without depleting your savings entirely.

2. Handling Unexpected Repairs & Maintenance

Even if your home is brand new, unexpected repairs can pop up. From a leaky roof to a broken water heater, homeownership comes with maintenance responsibilities that renters don’t have to worry about. Experts recommend setting aside 1% to 3% of your home’s value per year for maintenance costs. Without a financial buffer, a sudden repair bill could put you in a tough spot.

3. Avoiding Financial Strain & Mortgage Stress

Owning a home comes with fixed and variable expenses, from mortgage payments to property taxes, homeowners insurance, and utility bills. If unexpected life changes occur—such as job loss or medical expenses—a nest egg can provide financial stability, allowing you to continue making mortgage payments without unnecessary stress.

A good rule of thumb is to have at least three to six months’ worth of living expenses saved in an emergency fund before buying a home. This can act as a safety net in case of financial hardship.

4. Making Your Home Truly Yours

Once you move in, you may want to make upgrades or furnish your home. From painting and new flooring to purchasing appliances and furniture, these costs can add up quickly. A well-funded nest egg gives you the flexibility to personalize your home without relying on high-interest credit cards or loans.

5. Strengthening Your Loan Approval & Financial Standing

Lenders look at more than just your income and credit score—they also consider your overall financial health. Having additional savings can make you a more attractive borrower, potentially leading to better mortgage terms and lower interest rates. A strong financial cushion also means you’re less likely to overextend yourself, reducing the risk of financial hardship down the road.

Buying a home is an exciting milestone, but it’s important to go into it financially prepared. Having a nest egg not only helps cover unexpected costs but also provides long-term stability and peace of mind. Before taking the leap into homeownership, take the time to build your savings so you can confidently enjoy your new home without financial stress.

Thinking about buying a home? The Krop Team can help you find the perfect place while ensuring you're financially prepared for the journey. Contact us today!