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Homebuying Basics
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Owning a Home
Buying a home is a big step toward financial well-being. This page will take you through the basics of each stage in the homebuying process – since buying a home can be intimidating or seem complicated.
Weighing the Costs & Benefits
Costs
- Down Payment – could be as low as 3% of the sale price.
- Closing costs – typically 3% to 5% of the loan
- Monthly mortgage payment
- Taxes & insurance ayment
- Utilities
- Repairs & maintenance
- Homeowner association dues or assessments
Benefits
- Find your place: A home can be a stable place to start or grow a family, give you stronger ties to a community, and afford you greater privacy over an apartment.
- Make it yours: You can make changes to your home so it reflects your personality and lifestyle.
- Grow your wealth: Monthly payments reduce your principal balance, increasing your equity. Also, your home may increase in value over time.
- In some cases, deducting interest and property tax could save you money – consult a tax advisor to discuss your situation.
Estimated Mortgage Payment
Buying a home is a big financial step, and it’s important to understand what you can afford.
Start by assessing your income. Your mortgage payment should typically be no more than 28% of your monthly income. Keep in mind that some of that cost will be for insurance and taxes – insurance information is in the Appraisal, Closing & Beyond section of this page.
Then consider other commitments and liabilities – student loans, credit card balances and auto loans. Your total debt including this new mortgage should be no more than 36%. Keep in mind this is just a guideline; debt ratios may have some flexibility depending on the mortgage type you choose.
Remember to budget for the purchase, too:
- Down payments are typically 5% to 20% of the purchase price. Paying at least 20% down can help you avoid paying Private Mortgage Insurance (PMI).
- Closing costs are typically 2% to 3% of the purchase price. If you aren’t paying 20% down, PNC gives you the option to pay your PMI premium in a lump sum as part of closing costs, or as part of your monthly payment.
Affordability Calculator
Calculators are provided for educational and informational purposes only. Estimates and other information generated is deemed reliable, but is not guaranteed.
Understanding Loan Options
We have loan options for a variety of circumstances –
- Fixed Rate if you want an interest rate that never changes
- Adjustable Rate[1] for a lower starting rate that fluctuates (increases and decreases) over time
- Federal Housing Administration (FHA) loans offer expanded eligibility and low down payments
- Veterans Affairs (VA) loans for U.S. military service members
- Affordable options like PNC Community Mortgage and PNC Homeownership Grant
Finding a House & Who To Work With
Finding your dream home is easy with our Home Insight Planner.
Appraisal, Closing & Beyond
Before you can close, your lender will have the property appraised by an independent, third-party appraiser. They’ll confirm the value of the home. They’ll also conduct a title search to discover any record claims – to make sure you can get a clear title on your home.
At closing, if all goes according to plan, you’ll meet with all involved parties to make it official! You’ll sign documents, receive the deed and pay any closing costs. Closing costs might include:
- Attorney, broker, credit report and/or lender fees
- Title search fees and insurance
- Appraisal and inspection fees
- Points – a predetermined fee paid to the lender for a certain interest rate – 1 point is equal to 1% of the loan amount
- Other costs depending on your particular loan
Beyond closing, you'll be resposible for insurance and taxes:
- Homeowner's insurance protects you from losses to the property and liability for events on the property. This is required by lenders, to protect the collateral securing their loan.
- Disaster insurance covers catastrophic events that aren't covered by your homeowner's insurance. This could include fires, floods, earthquakes, tornadoes or hurricanes – and includes flood insurance, which protects against flood loss through the 1973 Flood Disaster Protection Act.
- Property taxes are due each year and typically paid from an escrow, or impound, account.
- Private Mortgage Insurance (PMI) is written by a private company to protect the mortgage lender agaisnt financial loss if you borrow defaults on your mortgage.
- Federal Housing Administration (FHA) insurance is undertaken by the FHA to insure the lender against loss if you go into default.
- Veterans Association (VA) funding fee is paid by you or a third party, directly to the Veterans Association, to guarantee a specified portion of the loan if you go into default.
Have Questions?
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PNC, PNC HomeHQ, PNC Home Insight and Home Insight are registered service marks of The PNC Financial Services Group, Inc. ("PNC"). PNC has a pending patent application directed at various features and functions of Home Insight® Planner. All loans are provided by PNC Bank, National Association, a subsidiary of PNC, and are subject to credit approval and property appraisal.
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