The Home Buyers Guide to
How Much House Can You Afford?
What Can I Afford?
A complete resource for new home buyers
When buying your first home, you’ll likely have a lot of questions.
The first thing you should do is find out how much house you can afford. Once you know this, you can start building your personalized home buying team.
Pro Tip: Most first-time home buyers go with a 30-year loan term but there are other loan terms available such as a 20-year or even 15-year mortgage.
Three Easy Ways to Get Started
What's My Monthly Payment?
Enter your numbers to estimate an affordable monthly payment based on your monthly after-tax income. These numbers are meant only to help build a better idea of your financial situation, to get expert advice, connect with an expert.
Budget Breakdown
It can be a struggle to figure out your initial home buying budget but it’s best to have an overall game plan once you start thinking about purchasing a home. Get a head start and become a home buying budget boss:
Down Payment:
3.5 - 20+%
of loan amount
Closing Costs:
2-5%
of loan amount
Mortgage Payment:
Principal Interest
Property Tax Insurance
How Much Does It Cost?
The true cost of a mortgage is just not your monthly mortgage payment. Much more goes into it. Here are the most common fees and services that go into your mortgage so you’ll know what to expect.
Down Payment
Cash that you will pay up front on the final price of your home before the mortgage starts.
Principal
The amount you have borrowed for your home and will need to pay back. If you purchase a home for $250,000 that is the amount of principal you owe.
Principal
The amount you are being charged in order to borrow the money. Interest is based on your principal sum. If you pay $250,000 in principal with a 4% interest rate, you will pay about $10,000 each year in interest until the loan is paid off.
Down Payment
Homeowner’s insurance is required. Private Mortgage Insurance (PMI) is for conventional home loans when you pay less than 20% toward your down payment. You will pay Mortgage Insurance Premiums (MIP) if you have an FHA loan.
Closing Costs
These costs are part of your final contract. Most home buyers pay 2-5% of the loan amount in closing fees which usually include: application fee, processing and insurance fees, property taxes, and title company expenses.
