Buying a home is one of the biggest financial commitments you’ll ever make, and it’s important to plan beyond the down payment and closing costs. Just like watching out for resale issues or cosmetic flips that hide bigger problems, you also need to prepare for unexpected financial surprises. That’s where an emergency fund comes in.

An emergency fund is a dedicated savings account designed to cover unexpected expenses such as home repairs, job loss, or medical bills without relying on credit cards or dipping into retirement savings. Financial experts typically recommend saving three to six months of living expenses, but homeowners may want to aim higher to cover potential repairs or maintenance.

To calculate your ideal emergency fund, total your essential monthly expenses mortgage, utilities, insurance, groceries, and transportation and multiply by the number of months you want to cover. For example, if your monthly expenses are $4,000, a six-month emergency fund would be $24,000.

Avoid counting your general savings or investments as your emergency fund. Those funds should be reserved for long-term goals, while your emergency fund remains easily accessible and liquid.

To build your fund, start by setting aside a specific amount each month, automate your savings, and redirect any windfalls like tax refunds or bonuses into the account.

When buying a home, having a well-funded emergency reserve helps you avoid pitfalls and ensures you’re financially ready for anything that comes your way.