How much home can I afford?

I believe the best way to figure this out is to go with your own “gut feeling” about how much you can afford per month… and then find a real estate professional you trust, who will tell you the realistic, worst case, total out-the-door-expense, with everything included… and then have them calculate how much your monthly budget translates to in sales price.

If your gut feeling turns out to be unrealistic, then your advisor should help you readjust your expectations. If they believe you can comfortably afford more than you first thought, they should point out why, but not pressure you to leave your comfort zone. Ultimately, you know yourself best, and a good professional should provide you with all the information in layman’s terms, so you can make an intelligent decision.

Just as its a good idea to use realistic worst-case place-holders when estimating recurring expenses, you may want to err on the side of being too conservative when estimating housefhold income… so think twice before counting next year’s raise, the bonus at Christmas, or your partner’s overtime.

Feel free to click Seth’s Awesome House Payment Calculator as a tool to help factor your down payment, principal, interest rates, private mortgage insurance, property tax, fire insurance, hoa fees, mello roos, estimated income tax deduction, realistic appreciation models, and even how long your reserves can cover you.

As a buyer’s advocate, who is both a real estate broker, as well as a registered mortgage advisor, I specialize in helping people buy homes and finance them, together, at one point of contact. Feel free to call anytime for help figuring out exactly where you stand.

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