What Can You Really Afford? Before Falling In Love With A Dream Home

What Can You Really Afford?
before falling in love with a dream home

Let’s be real: crunching numbers isn’t as exciting as touring dreamy kitchens or imagining your future backyard, but it’s a must-do first step in buying a home.

Before you dive into open houses and Pinterest boards, you’ve got to know your financial foundation. Start with a few basics:

👉 What’s your monthly income (before taxes)?

👉 What do you spend each month (realistically)?

👉 Any credit card debt hanging around?

👉 What’s your savings looking like?

💰 A quick rule of thumb: Most lenders say you shouldn’t spend more than 28% of your gross income on your mortgage — and that includes principal, interest, taxes, and insurance (aka PITI).

But there's more to the puzzle than just income. Let’s talk about the other big players:

Credit Score = Big Deal 📊
Lenders love a good credit score. The better yours is, the better your loan options (and interest rates) will be. Not sure where you stand? Pull your credit report and see what needs cleaning up. Building or boosting your credit can make a huge difference in what you qualify for.

Rates Matter A LOT 📉
Even a tiny bump in mortgage rates can shift your budget more than you’d expect. Lower rates = lower monthly payments = more buying power. So yes, stalking interest rates is totally valid.

Hidden Costs You 🏡
 Here’s what else you’ll need to budget for:
✔️ Down payment (typically 5–20%, but sometimes as low as 3%)
✔️ Closing costs (usually 2–5% of the purchase price) — this includes stuff like the appraisal, inspections, and closing costs services.

Pre-approval = Power Move 💪
Once you know your numbers, getting pre-approved (not just pre-qualified) helps you shop with confidence and stand out to sellers. It's like walking into a store with a gift card instead of guessing what you can afford. 

💡 Pro Tip: Once you know your numbers, getting pre-approved shows sellers you mean business and gives you a clear idea of your true buying power. Find the 'Home Budget Calculator' at the end of this article.

Lifestyle Check ✅
Just because a lender approves you for a certain amount doesn’t mean you should spend that much. Make sure your monthly payment fits your real life. 

💡 Pro Tip: Just because a lender approves you for it doesn’t mean it fits your life. Think beyond just the monthly payment. Will this new home leave room for travel, savings, or daycare? Look for the 'Budget Worksheet' at the end of this article.

Leave Room for the “Oh No” Fund 💸
Life happens. Don’t max out your budget — build in a little buffer for the unexpected. It’ll keep you sane and make homeownership way less stressful.

💡 Pro Tip: Don’t max out your budget. Leave a cushion for unexpected costs like home repairs, moving expenses, or surprise life stuff.

Not sure where to start? 🤔
If the numbers are making your head spin, I’m happy to connect you with a lender I trust or walk you through what to expect — no pressure, just real talk. Shoot me a message anytime.

Bottom line✨

Knowing what you can afford upfront saves you time, heartbreak, and maybe a few panic attacks down the road. Let’s set you up for success from the start with a plan that fits your life and your goals. You don’t have to figure it all out alone. I’m here to help make the process feel a whole lot less overwhelming (and maybe even a little fun 😉). 

You’ve got this! 🙌

HELPFUL LINKS

What Is a Good Credit Score?

Home Budget Calculator

How Much House Can I Afford? Video 

Budget Worksheet

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