How Much Home Can I Afford?

How much home can you afford? It’s an important question. And there is more to it than you might think. Maybe you’ve done some calculations, and you know you’ll be able to make the payments on your dream home. But will you be able to do anything else?

Being house poor means you can make your mortgage payments and pay the rest of your bills, but that is all you can do. Vacation? Renovations? Unexpected car repairs? You can’t pay for those because every penny you make goes toward your mortgage and your other bills. Don’t be house poor; let us help you figure out how much you can really afford.

Qualifying for a Home Loan

The first step for the great majority of home buyers is to become approved for a home or mortgage loan. Lenders look at your numbers to decide if you qualify. They will want to know the following:

  • Income

  • Assets

  • Debt

  • Credit Score

  • Property Type

This is you by the numbers. What your lender does not know about you is possibly even more important for preventing you from becoming house poor. 

After Becoming Qualified for a Mortgage Loan

Once a lender looks at your numbers and determines whether or not you qualify, you want to discuss with them and your realtor your other hobbies and expectations. Do you have an expensive hobby like traveling, collecting, or boating?

You want to add these into your budget at the very beginning when you are determining how much house you can afford. These aren’t your necessary expenses, but they make your life enjoyable. Do you want to give them up for a dream home?

A Mortgage Calculator and How to Use It

Using a mortgage calculator is an important tool for helping you figure out how much home you can afford. Type in all your information, such as your loan type, how long you will have the loan (loan term), the price of the property, how much you are putting down for the down payment, and the interest rate. The calculator will tell you how much your monthly mortgage payment will be. 

Use this information to put together a post-home-buying budget.

Budget for After Buying Your Home

Take the projected mortgage payment from the mortgage calculator and create a budget for after you buy the house you have in mind. Include all the usual budget items, like utilities, car payments, insurance, and the like. 

But don’t forget to include money for the things you enjoy doing. If you get a 30-year mortgage, you are going to want to take a vacation at some point before those 30 years are over. Plan for it. What if the car breaks down? Put some money aside in your projected budget for the unexpected.

If the home or mortgage loan is taking up all your extra cash, the home you are considering buying is more home than you can afford. 

Consider a Longer-Term Mortgage

Generally, there are two main mortgage lengths, 15-year and 30-year. If you used the mortgage calculator and typed in for a 15-year mortgage, your payment is going to be higher. You have fewer years to pay it off than a longer loan. 

Go back to the calculator and see what your payment will be with a 30-year mortgage. The thirty-year mortgage is the most popular because it provides a lower monthly payment. 

These are not your only loan options. Check with your lender to find the right loan for your needs.

How Much Should Your Down Payment Be?

It is a good idea to play around with how much you should use for your down payment. The more you put down upfront, the less loan you will need, and the lower your monthly payment will be. 

However, you do not want to put all your money into the downpayment. You need something to fall back on in case of emergencies. It is generally a good idea to have an emergency fund equivalent to at least three months of your total monthly expenses. 


Before making an offer on a house, make sure you can afford it and still live the life you are used to living. 

Find a lender and get qualified for a home loan or mortgage loan. Use a mortgage calculator to determine your payments if you get the house you have in mind. Prepare a budget for after you buy the home. Don’t forget to include expenses like vacations and saving for emergencies. 

MortgageWorks offers financing for new home purchase, refinance, home equity, investment property, construction and a wide variety of loan program options to fit your every needs.


Servicing the state of California and the entire Coachella Valley, including Palm Springs, Cathedral City, Rancho Mirage, Indian Wells, Palm Desert, Desert Hot Springs, La Quinta, Indio and Coachella. Call Art today @ (760) 883-5700

* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.