Obviously, there is a down payment required to start with. With a FHA loan the down payment is 3.5% of the purchase price. In addition there are closing costs. In today’s real estate market it is not unusual for the buyer to ask the seller to pay the buyer’s closing costs which would be included in the final agreed purchase price. Closing costs in Chicago, Illinois could be approximately 1 to 1-1/2% of the purchase price. But, again, check with your lender and your attorney to give you a more accurate figure. Remember, 0.75% of the purchase price is the City of Chicago transfer tax payable at the Closing. So the majority of your closing costs as a buyer are due to this transfer tax.
On a different note, conventional loans require at least a 5% down payment (for loans up to $417,000).
Jumbo loans (over $417,000) require at least 20% down payment.
Also, remember that there are some upfront costs/money associated with buying real estate: home inspection, mortgage application fee and earnest money for the purchase of the home (which is held in an escrow account until closing) are some of the items which you are required to pay prior to closing.
As an example: If you’re buying with an FHA loan you would need 3.5% of the purchase price + closing costs (unless you negotiate for the Seller to pay them for you). In addition you will need to have additional cash reserves as a “cushion” after closing. Being a prudent and careful buyer you DO NOT want to deplete all of your cash accounts to buy real estate. Figure out what you can afford click here