How Much Can I Afford?

The home price you can afford depends on four key factors:

1. How much you can pay monthly
2. How much you can pay up front in a down payment
3. The kind of loan you get, for example a 30-year fixed, 30-year adjustable, 15-year fixed, etc.
4. The interest rate and terms of your loan

Along with the funds available for the down payment, the amount you can pay monthly is the biggest factor in determining how much you can afford. Your total monthly home payment will include mortgage principal, interest, property taxes, homeowner's insurance, and any mortgage insurance.

Many homeowners pay their property taxes and homeowners insurance bundled into their mortgage payment. This arrangement is known as an escrow account. If you do not have an escrow account, you will still have to pay these costs. An escrow account lets you put aside the money monthly so that you won’t have a big expense during the year.

Some homes have Homeowners Association (HOA) dues. These fees vary widely depending on the amenities provided by the community. Consider these fees carefully when comparing potential homes. HOA fees are usually paid separately from your monthly mortgage payment.

When you have your budget set, and you’re ready to begin shopping for a new home, getting prequalified is a great first step. Then, when you find the home that you love, you’re able to act quickly. Click here to get the ball rolling and to get connected with a few lenders who can prequalify you.