Published December 30, 2022

LiveMARYLAND Buyer Tip: How Do I Know If I Can Afford To Buy A House This Year?

Written by Tim Mcintyre

LiveMARYLAND Buyer Tip: How Do I Know If I Can Afford To Buy A House This Year? header image.

Are you curious as to whether or not buying a home is within reach? It's important that you feel confident about how much house you can afford before you hit the ground running and start home shopping. The first step in house hunting is getting pre-approved, but in case you're not quite ready to commit, I've outlined a few guidelines that can provide a starting point for answering the question: how much home can I afford?

Most financial experts say housing expenses should be no more than 30% of your total pre-tax (gross) income. This includes your monthly principal and interest mortgage payment, homeowners insurance, property taxes, PMI payments (if applicable), and any HOA/Condo fees.

For example, if your salary is $65,000 per year, your gross monthly income is $5,416 ($65,000 / 12). Therefore, your total housing costs (principal, interest, taxes, and insurance) shouldn’t exceed $1,624 per month (30% of $5,416).

If you have a lot of debt, it may be best to try and pay off some credit cards or other loans first before purchasing a home. It's also important to remember that lenders are qualifying you based on your GROSS, pre-taxable income, which is typically not your take-home pay, so you should put together a budget to ensure that you are going to be comfortable with your new mortgage payment, and not end up "house poor". Don’t forget to factor in other expenses such as utilities, ongoing home maintenance, and homeowner’s insurance.

Are you ready to start your journey on the LiveMARYLAND Path to Homeownership? Message, text, call, or email us at shari@livemaryland.com, and we’ll find out more about your circumstances to get you connected with the right program for you!

The McIntyre Team of Keller Williams Integrity
Direct: (443) 870-4268 | Office: (443) 574-1600