Can You Afford a Mortgage?

If you’re preparing to start house shopping, you’ve likely reviewed your budget and wondered how much home you can afford. You may even question whether you can afford a mortgage at all. Several factors can help you decide if buying a home is the right step.

Rent vs. Mortgage

In some areas, renting a home may cost less than buying one of the same size, while in other areas, the opposite may be true. Housing costs can fluctuate over time, even in the same neighborhood. A real estate agent can help you understand local trends and what homes are available.

Extra Expenses

When calculating affordability, consider more than just the purchase price. Interest rates, insurance, and property taxes affect your monthly payment. Lenders refer to this as PITI—principal, interest, taxes, and insurance. Although lenders calculate it at closing, you should estimate it early in the mortgage process.

You also need to budget for maintenance and repairs. Homeownership often comes with costs that a landlord would cover if you rented.

Compare What You Qualify For with Your Budget

Talk to a loan officer to see how much you qualify for. Then compare that amount with your personal budget to decide what works best for you. Remember, you don’t have to buy the most expensive home you qualify for. Choosing a smaller or more affordable house can free up money for renovations, upgrades, and entertaining in your new home.