How to Budget for Buying Your First Home (Without Losing Your Mind)
Thinking about buying your first home? That’s exciting! Before you start scrolling through listings and picturing your future coffee nook, let’s talk about the part that makes everything possible: your budget.
A solid budget helps you make confident choices that fit your lifestyle and your wallet. Here’s how I recommend getting your finances ready so you know what you can comfortably spend.
Why Budgeting Matters (Your Home-Buying GPS)
Budgeting isn’t glamorous, but it’s the key to avoiding stress later. When you know your numbers, you can focus on homes that truly fit your price range—no heartbreak over that dreamy house that’s way out of reach.
A common guideline? Keep housing costs—mortgage, taxes, insurance, and HOA fees—at or below 28% of your gross monthly income. But everyone’s situation is unique, so think of this as a starting point, not a hard rule.
Step One: Get Your Finances Ready (Deep Breath, You Got This)
Start with two questions:
What’s coming in? (Your income)
What’s going out? (Your expenses)
Your gross monthly income is a big factor in determining your max loan amount. And it’s not just your paycheck—other income sources might count too. That’s where I come in—I can help you figure out what qualifies.
Next, list your monthly expenses: groceries, car payments, student loans, credit card minimums, streaming subscriptions—everything.
Five Steps to Build Your Home-Buying Budget
Calculate your income: Write down all the money you regularly receive.
Track your spending: Record every expense for a month, including debt payments.
Do the math: Subtract expenses from income to see what’s left for a mortgage payment.
Check your goals: Make sure that number leaves room for savings and emergencies.
Find savings opportunities: Can you trim spending to boost your home fund?
Your future self will thank you for this.
What Goes Into Your Overall Home Budget (Spoiler: It’s More Than the Mortgage)
Your mortgage payment is just the beginning. Here’s what else to plan for:
1. Maintenance Costs
Homes need TLC! NAR suggests saving 1–4% of your home’s value each year for upkeep. Older homes usually cost more to maintain than newer ones.
2. HOA Fees
Buying in an HOA community? Ask about monthly or annual fees, what they cover, and how often they increase.
3. Monthly Mortgage Breakdown
Your Loan Estimate will show your projected payment, including principal, interest, taxes, insurance, and possibly PMI. I can walk you through this so you know exactly what to expect.
4. Closing Costs
Expect 2–5% of your home’s price for closing costs. I can help you estimate this and explore ways to reduce your cash-to-close.
5. Moving Expenses
Even short moves add up! Factor in movers, truck rentals, gas, packing supplies, and cleaning costs.
Down Payment Decisions (Big vs. Small—What’s Best for You?)
Your down payment affects your monthly payment and loan costs. Bigger down payment = lower monthly payment. Smaller down payment = you get into your home sooner. There are even low and no down payment options available! I can show you how different amounts impact your payment.
Get Pre-Approved (Confidence Looks Good on You)
Pre-approval is your ticket to shopping with confidence. We offer programs with down payment assistance, temporary buydowns, and more to make homeownership accessible. Ready to start? Fill out the short form on the contact page, and I’ll reach out personally!
Disclaimer: This info is for educational purposes only. Loan programs, rates, and terms can change without notice. All loans subject to underwriter approval. Consult a tax advisor for details on deductions.