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It is incredibly important to have decided on a home buying budget before beginning to look at houses. Having a budget already in place ensures buyers only look at homes they can comfortably afford. These tips can help anyone arrive at the right numbers.

Keep Income Ratios In Mind

Most lenders agree that a total mortgage payment should be less than 28% of monthly income. This amount includes the principal of the loan itself, interest, insurance, and taxes. It’s a good guideline to adhere to when beginning to calculate a budget.

Consider Down Payment Options

While the traditional down payment for home buying is 20%, buyers who have less are not necessarily excluded from being able to secure a home loan. Of course, the higher the down payment amount, the less a homeowner will pay in interest over the years. However, some loan types and programs require as little as 3% of the purchase price of the home as a down payment. The down payment amount required can therefore considerably alter the final amount that can be spent on a home.

Don’t Forget Property Taxes

Potential buyers need to consider the annual cost of property taxes when determining how much they can afford to pay for a house. This is often an afterthought when looking at the sticker prices of homes currently available on the market, but needs to be considered sooner. Property tax law varies by jurisdiction but the amount is typically based on the sales price. Buyers should learn what standard property tax rates are in their area and take that amount into account when budgeting.

Find Out If There Are HOA Fees

Properties in homeowners associations come with additional fees owners are required to pay. While most associations exist to maintain the shared spaces of multifamily housing such as condos and townhomes, single-family homes can be part of associations too. Prospective buyers need to consider whether they want to buy into an HOA as well as what the cost of being in a particular association will be. Many charge their fees monthly, but others pay quarterly, annually, or at less common frequencies.

Homebuying budgets are ultimately a personal decision based on a buyer’s specific situation. Keep the amount comfortable, but also don’t settle on a property that will be a mistake, such as one in a nonideal location or one that is too small.