How Much House Can You Afford?
How Much Home Can You Afford?
Are you thinking about buying a home but unsure how much you can comfortably afford? You’re not alone—and the good news is that most of my clients are pleasantly surprised by their approval numbers. No stress required. Let’s break it down step by step so you can feel confident and prepared as you move forward.
Step 1: Review Your Income and Monthly Expenses
The first step is understanding your financial picture. Lenders typically recommend that your total housing costs—mortgage, property taxes, and homeowners insurance—fall between 28% and 31% of your gross monthly income.
This guideline is a great starting point when determining a realistic and sustainable housing budget.
Step 2: Factor in Your Down Payment
Your down payment plays a big role in what you can afford. Generally, the larger the down payment, the lower your monthly mortgage payment.
That said, if you have a smaller down payment, don’t panic—there are many loan programs and options available that can still help you get into a home sooner than you might expect.
Step 3: Don’t Forget About Closing Costs
Closing costs are often overlooked, but they’re an important part of the equation. These typically run 2% to 5% of the home’s purchase price and include items such as:
Home inspections
Appraisal fees
Title and lender fees
Setting up your escrow account
Planning for these costs upfront will help avoid surprises later.
Step 4: Plan for Ongoing Homeownership Costs
Owning a home comes with ongoing expenses beyond the mortgage. Be sure to account for:
Property taxes
Homeowners insurance
Utilities
Routine maintenance and repairs
All of these impact what you can comfortably afford month to month.
A Helpful Guideline: The 28/36 Rule
One of the most trusted budgeting tools in home financing is the 28/36 rule:
Spend no more than 28% of your income on housing expenses
Keep total monthly debt under 36% of your income
Following this rule helps keep your finances balanced and your stress levels low.
Final Thoughts: Buy Smart, Not Big
Just because you’re approved for a certain amount doesn’t mean you need to spend it all. The goal is to find a home that supports your lifestyle—not one that leaves you feeling “house poor.”
Knowing how much house you can afford means looking at the full picture: your income, expenses, and future goals.
If you’re ready to get pre-approved or want help running the numbers, I’d love to guide you and connect you with an amazing lender. Let’s make sure you buy confidently and comfortably.
Raegan Thorp & Team
Raegan Thorp Real Estate Group
📧 raegan@rtrg.homes
📧 info@rtrg.homes
🌐 www.RaeganThorp.com
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