Venturing into homeownership is likely the biggest purchase of your lifetime, so it’s only natural to ask yourself if you can afford to buy a house. While mortgage pre-approval can provide a general borrowing amount, affordability goes way beyond simply qualifying for a loan.
The right home budget depends on your income, monthly expenses, your short- and long-term financial goals, plus overall comfort level. There are also multiple expenses that come along with home ownership (which looks like a busted water heater in the middle of the night), that also impacts affordability.
Purchasing a home that fits within your budget can help reduce financial stress and make homeownership feel more manageable over time, while still helping you achieve your home ownership dreams.
What Costs Should I Consider Beyond The Mortgage Payment?
Homeownership expenses can quickly add up, which can stretch your budget way beyond the monthly principal and interest payments. This should be taken into account so you can get a more realistic picture of your monthly spend.
These costs may include:
● Property taxes
● Homeowners insurance
● Utility bills
● Home maintenance and repairs
● HOA fees
● Lawn care and landscaping
● Emergency home expenses
How Much Of My Income Should Go Toward Housing?
One of the most common recommendations from financial experts is to stick around 25 to 30 percent of your gross income for your monthly mortgage payment. But this doesn’t factor in the additional costs mentioned above.
When reviewing your budget, consider:
● Your current monthly debt payments
● Emergency savings goals
● Childcare or family expenses
● Retirement contributions
● Future financial plans
● Everyday household costs
Having room in your budget for unexpected housing expenses, plus considering your entire financial picture, can set you up for a more realistic (and sustainable) budget.
How Much Should I Save Before Buying A House?
In addition to a down payment, homebuyers should also prepare for closing costs and moving expenses. Having savings set aside can provide additional financial flexibility during the transition into homeownership.
Some buyers may qualify for low down payment mortgage options, while others choose to save more upfront to reduce their monthly payment. The right approach depends on your financial goals and overall budget.
Should I Get Pre-Approved Before House Hunting?
Getting pre-approved for a mortgage can provide a clearer picture of how much home you may be able to afford before you begin searching. Pre-approval can also help streamline the buying process and show sellers that you’re a serious buyer.
At Space Age Credit Union, we make the mortgage process easier with online applications, helpful lending guidance, and personalized support every step of the way. Whether you’re buying your first home or planning your next move, our team is here to help you find a financing solution that fits your budget and long-term goals.
