That’s a smart question to ask, especially since buying a house can come with a lot of hidden expenses that are easy to overlook until closing day.

Are you planning on buying a house? Is it your first? You likely have many questions about the entire process, but the biggest may be how much money do I need to buy a house? There are many costs to consider when calculating how much money you need to buy a house beyond just the down payment–though that is a huge factor. In this article, mortgage expert Jon Estes breaks down the entire process.

How much down payment do I need to buy a home?

Preparing to buy a home begins with a checklist of qualifications. Debt paid down? Check. Steady income and employment? Check. Credit score high enough? Check. And then there’s the down payment. For many potential buyers, it’s difficult to pay down debt while saving money for a down payment. For years, the magic number to put down on a home has been 20 percent. This is a common misconception, as many lenders now offer solutions to lessen the burden of a down payment for qualifying borrowers.

Is it possible to buy a home without putting down 20 percent?

Every situation is different, of course, but there are loan programs available that can get you into a home with little to no down payment. An experienced lender will offer borrowers a wide range of loan options that fit their individual financial situation.

What different types of loans are available?

Fixed-rate loans provide the peace of mind that your rate and payments will never change. This makes budgeting and planning your financial future simple. Fixed rate loans are a great option if you plan to live in your home for a long time.

Adjustable Rate Mortgages (ARM) offer a fixed-rate for a portion of the loan, and then the interest rate adjusts yearly on the remaining portion. ARMs are hybrids that work together with the buyer’s short- and long-term goals. ARMs are a great option for those who plan to move before the initial loan term ends. Advantages include low rates, fixed payments for the initial portion of the loan term, and rates and payments adjusted to reflect the current market when the fixed rate period ends. You can also take advantage of falling rates without refinancing.

Jumbo loans are for mortgages above $453,100. Jumbo loans vary depending upon the buyer’s own financial situation, and special programs may be available for professionals from certain industries.

Portfolio loans are offered by some lenders for a certain population of buyers, such as small business owners, doctors, those with a gap in employment due to relocation, or professionals with seasonal or commission-based income. Common portfolio loans include jumbo loans, one-time construction loans, lot loans, and purchase/refinance plus improvement loans.

Reverse mortgage loans are available to seniors age 62 and older who want to turn the equity in their home into a reliable source of monthly income. Advantages include no income or credit requirements, flexible distribution options, non-taxable proceeds, and fixed or adjustable rates.

Conventional Fannie Mae or Freddie Mac loans are government-sponsored loans for homes up to $453,100. Borrowers who qualify for these loans may be able to take advantage of reduced down payment requirements.

Government loans include FHA, VA, and USDA mortgages. Borrowers who meet individual program requirements can usually qualify under lower credit score and down payment guidelines. Other benefits may also be available.

How do I know which types of loans I qualify for?

Because there are so many loan options available, the best thing you can do is make an appointment with a reputable, experienced loan officer to review your individual financial picture and discuss your short- and long-term goals. I go through different scenarios with my clients and present options that best fit their needs. Many people who don’t have a big down payment are surprised to discover that home ownership is still an option.

What are the first steps I should take if I’m thinking of applying for a mortgage loan?

  1. Get a copy of your credit report and review it to make sure there are no mistakes or abnormalities.
  2. Evaluate your employment history. If you are thinking of changing jobs, try to hold off before purchasing a home. Lenders like to see lengthy, stable employment and income.
  3. Save your money. Whether or not you plan to use your savings for a down payment, lenders want to see cash in reserves.