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What do I need?


Some savings

This amount depends on the kind of financing you're using. It can be reduced in various ways, whether through an early withdrawal from a retirement plan in some cases (please consult a tax advisor about that instance since I am not a CPA), money from family, etc. With some loans, you pay less than what you would to rent out a comparable home. On the other extreme, you have some purchases in all cash. I've handled both extremes in my time as a buyer's agent.

The amount you need for a home purchase will depend on your preferences and what loans and other programs you qualify for.

Costs Typically Involved

1. Downpayment (if applicable) For some conventional loans with Garrett Mortgage, a VA loan, NACA, most USDA loans, programs with down payment assistance that meets or exceeds the down payment requirements of your loan, you won't need any down payment. Even if doing a no down payment loan, you usually need at least 1% of the purchase price of a home in reserves that will not go toward the home purchase, although 401k & IRA's can help with those in some cases.

2. Emergency Fund (recommended) Whether renting or buying, I also recommend that you have money for an emergency fund even if you purchase a home warranty & home insurance (the latter of which is required for mortgages). Home warranties can still have co-pays, not everyone gets a home warranty, & home warranties as well as home insurance have limited coverage. You still should have sufficient co-pay funds in the event of a serious car accident or other major medical problems. Those with lower credit should develop more resources at their disposal than those with great credit, all other factors the same, because of the added cost of taking out a personal loan (or 0% introductory interest rate credit card) inherent in those with low credit should an emergency occur where savings, liquid assets (i.e. stock not in a retirement fund), & retirement fund withdrawals are insufficient.

3. Funds for Inspections (typically recommended & sometimes required) You will also usually need money for a home inspection (usually $275-$550 with some of the inspectors I like to use but these can vary substantially, usually over $300 with other inspectors). If using a mortgage, typically septic/well inspections are required. Sometimes sellers pay for termite/moisture inspections, septic inspections, and well inspections but in other cases buyers will foot those costs (if applicable for septic/well). Sometimes buyers will want additional inspections as well where the buyer would typically foot the bill, like a foundation inspection, water flow inspection, mold inspection, & radon inspection (more typical of Richmond than Hampton Roads due to Radon risks further West). In my case, I have a radon detector, the Ecosense RD200 RadonEye, Home Radon Detector, so if you're looking to do one of those with my detector (one that is more rapid/accurate than many), it'd be free. For a cost like a home inspection, it's typically paid prior to the inspection or on the day of the inspection by the buyer. Some buyers will forego a home inspection in order to strengthen an offer, but I don't recommend that for most buyers in most scenarios unless they did a very thorough showing with a highly knowledgeable & detailed agent (i.e. going in the crawlspace and attic even if scuttle access to the attic & the crawlspace requires literal crawling, with the water & electric on at the time of showing, observing the roof from a drone, etc.) and have a high level of industry knowledge, i.e. a class A contractor or builder.

4. Appraisal (often $500-$650 for a home but I've seen $850 for a rural area on an acre & much higher on dozens of acres). There are some cases where the buyer can forego an appraisal. While the most common one is a cash buyer looking to strengthen an offer in a multiple-offer scenario where comparable sales point to the property being offered below value where the agent underpriced it, there are also some cases where a buyer using a traditional mortgage can forego an appraisal due to the size of their downpayment, lender, and other factors unique to the home. Appraisals are typically paid by the buyer prior to the time of the appraisal after the home inspection contingency is removed.

5. Earnest Money Deposit ( - 1% is typically viable, & minimum acceptable is usually $500 but that amount may be too low for some properties, especially those over $200,000).  In some cases, a minimum EMD is specified, & that depends largely on the MLS used. In CVR MLS, there is a specific location on the listing for agents to specify the minimum EMD, whereas in REIN, there isn't a specific location for it, so if it's added, which is much rarer than CVR because of the absence of a specific location for it, it's in the agent remarks typically. Typically this amount is paid within 2 business days of contract ratification with REIN offers, while the amount tends to vary more with VAR offers & be by calendar days rather than by business days.

6. Closing costs & prepaid expenses for a purchase can sometimes be covered entirely by the seller, & sometimes by the lender or a program to reduce home costs, but even then, you typically will need to front appraisal fees. In a hot market like 2021/2022, the majority of sellers aren't providing any closing costs in Hampton Roads, but there are still exceptions at times. While typically 3%-4.5%, some costs like a VA funding fee for a VA loan, if applicable, can be wrapped into your loan if needed, and sometimes that funding fee being high would push the total above 4.5%. The higher the purchase price, the lower the closing costs/prepaids, and if buying in cash, that also reduces these costs. Some loans will allow more closing costs/appraisal fees to be covered by the seller than others. Most banks/credit unions only allow 3% closing costs/prepaids covered by the seller for the buyer on a 5% conventional loan, but even then there are exceptions like Garrett Mortgage not capping this amount, last time I checked with a GM lender, on a 5% down loan. Those purchasing in cash will incur lower closing costs/prepaids than those purchasing the same property with a mortgage.

7. Whether renting or buying, there may be some up-front deposits needed for utilities. For instance, when my wife & I bought our Isle of Wight home, the county wanted $240 for water/sewer.

8. Sometimes there are other upfront fees involved for entry into an association that are required for any purchaser of a home. While typically these costs, if applicable, are below $1k, there are some cases where these costs can be 10's of thousands of dollars (i.e. Governor's Land in Williamsburg).

9. There are many other potential fees that are more rare. For instance, if buying a home at auction, you might be responsible for a non-refundable large deposit (i.e. 5% or 10% of the purchase price) &/or a 10% buyer's premium that needs to be paid on top of the sales price. In some distressed sales including some auctions, you might also be responsible for covering back-taxes etc.

Credit Score (Typically) Above 580 if Using a Mortgage

FICO Credit Score above 580

While some lenders will only accept buyers whose credit is 620 or 640, others, including some at Greg Garrett, will accept buyers with a score as low as 580 (500 if you have a 20% down payment). If you want to raise your credit, contact Adam Garrett so that he can put you in contact with a lender who can help you boost your score free of charge. Adam can also help you to boost your score if you would like, and he also suggests that you check the "Credit's Impact & How to Build It" section of this website. If your score is below 740, I suggest taking some measures to build it to minimize your interest rate. While some lenders charge the minimum interest rates at 720, others charge the minimum interest rates at 740. Keeping a buffer above that figure is helpful, especially if it comes at no or low cost. Bankruptcies, short sales, and judgments can also limit your ability to buy, however there are ways to get around each by knowing what you're doing and with as little as 3 months time in the case of judgments with a payment plan and no waiting period with some short sales (as detailed in the "short sales" hyperlink above). 

There are exceptions, including 1 loan I'm aware of where credit score isn't considered (though credit factors can disqualify you from the flat interest rates available for those with that loan, and there are substantial negatives with that loan dissuading many from the hassle including bad reviews by some). There are also cash buyers who can have terrible credit (though they typically have good credit) if they want to and still purchase.

Job(s) for the Past Two Years (usually) in the Same Field if Using a Mortgage

Positive exceptions to this rule include those coming out of college who have a job in their field of study with a contract. Another exception is those who have had multiple jobs within the same career field for two years with no breaks between jobs of more than 1 month. Talk to your loan officer to see about other exceptions.

One negative exception is if your form of income has changed in the past year, such as going from salaried or hourly to commission-based. 

A Mortgage Lender (optional)

For most people, this person is not optional. They cannot afford a home in cash. Even those that you wouldn't think could get a mortgage often can, whether those with poor credit scores, DACA buyers, those with very little cash reserves, etc.

A REALTOR® (optional)

Close to 90% of buyers choose to work with a real estate agent representing them (NAR). My buyer clients pay me nothing as long as the seller is paying even a relatively low commission. My commission typically (with no exceptions as of 2023 since I started as a Realtor in 2015) comes from the purchase of a property, paid for by the seller. The rare case where a buyer would pay me is if the seller were not paying any buyer's agent commission and we were not able to negotiate one. Even then what a buyer would pay GRP would be a very low 2% (minimum $2k at the time of this writing for properties <$100k) when the industry standard is 3%. Also that fee would be paid to GRP, not directly to me, and could include a referral fee, so after my split when it's all said and done, I may only be getting less than 1% if there is an additional referral fee that is the same as a few homes I've helped buyers to acquire in the past 6 months at the time of this writing. While there are some cases where a for sale by owner home will not offer a buyer's agent commission, it is rare that homes are purchased that way and I have never closed on such a home with a buyer before. Such properties can be avoided, however, I suggest still considering them in case you find a particularly good deal. A FSBO home that is priced to sell, especially one that doesn't have any SBC, is usually going to go for a lower amount than a comparable home that is listed with a Realtor. That said, many FSBO homes are overpriced, in part because of the lack of agent coaching on price and other matters. 

Keep in mind that not every real estate agent is a REALTOR®. REALTOR®s have higher standards that they are required to abide by. Some licensed real estate agents, including at least one that I worked with, have had their REALTOR® designation removed due to unethical behavior. Keep in mind that they are still licensed real estate agents while no longer a REALTOR®. 

When choosing a REALTOR®, remember that some take their fiduciary duty to always keep their clients' best interest in mind above their own more seriously than others. Knowing that your REALTOR® is a man or a woman of integrity is also critical. While the average REALTOR® works 40 hours a week, some are lazy, so be sure to choose one that you are confident will work hard for you. I also recommend choosing someone who is competent and knowledgeable about the business. Greg Garrett Realty has trained some of the top agents in the area. 

For those purchasing a home from a distance, it is helpful to choose a REALTOR® who is tech-savvy, especially someone who can walk you through digital signatures and can shoot live or recorded video to help you preview properties. I have helped long-distance clients in the past through these means.  


For more of what you need,  go to the Mortgage & Financial page,  Finding a Home, or my Credit's Impact & How to Build it page. 

Note: The content on this site is not provided by a bank or issuer. Opinions expressed here are author's alone, not those of a bank or issuer, and have not been reviewed, approved or otherwise endorsed by a bank or issuer. 

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