How Much House Can You Afford?

"How much house can I afford?" Have you ever asked yourself that question and are still wondering the answer? Well, I have the answer for you.

There is no magic dollar amount that you should be looking for regarding the "perfect home". How much house you can afford is as unique as you are; it's based on many factors, including your location, income, savings, personal preferences, and most importantly, the house-buying plan you have in place.

The most ideal way to buy a house is the 100%-down plan. Sounds weird, doesn't it?! But think how much fun that would be! Don't borrow money. Period. If I can't get you to postpone the purchase that long, I strongly suggest you save a down payment of 20% or more, choose a 15-year (or less) fixed-rate mortgage, and limit your monthly payment to 25% or less of your monthly take-home pay.

You want your new home to be a blessing, not a curse. If you buy a house with nothing down and a huge monthly payment, you're inviting Murphy to move into the spare bedroom. You do not want Murphy as a housemate - believe me! Slow down and realistically think through everything before you jump head-first into making this major purchase. If you don't, you'll just be giving Murphy an open invitation to overtake the house.

Here's a quick checklist of important questions to review as you consider how much house you can afford. If you cannot answer "yes" to these questions regarding the house you have your eye on, then it's not a wise move to buy it right now.

• Can I make at least a 10% (preferably a 20%) down payment?
• Can I keep house payments at or below 25% of my monthly take-home pay? Here's a calculator to help you quickly calculate your payment.
• Can I afford to take out a 15-year fixed-rate loan?
• Am I working closely with a real estate agent I can trust?

As a free service for my listeners, we can put you in touch with a real estate agent in your neighborhood that I recommend. These agents follow my teachings and will ensure you get a great house that you can afford! Get connected now.

Happy house-hunting!