How Much House Can You Really Afford? The Complete First-Time Buyer's Guide

How Much House Can You Really Afford? The Complete First-Time Buyer's Guide"

Introduction

"How much house can I afford?" This single question dominates Google searches among first-time homebuyers—and for good reason. It's the foundation of your entire home buying journey, yet most people don't know where to start or what factors to consider beyond the basic math.

The 43% Rule: Your Starting Point

The most widely accepted guideline is the debt-to-income (DTI) ratio: your total monthly debt payments (including your new mortgage) should not exceed 43% of your gross monthly income.

Example:

• Monthly gross income: $6,000
• Maximum total debt: $2,580 ($6,000 × 43%)
• If you have $500 in other debts: Maximum mortgage payment = $2,080

But Wait—There's More to Consider

The 28/36 Rule

Many lenders also follow the 28/36 rule:

• 28%: Maximum housing costs (mortgage, taxes, insurance)
• 36%: Maximum total monthly debt payments

What Lenders DON'T Consider (But You Should!)

• Utilities and maintenance costs
• Your lifestyle and spending habits
• Future family or career changes
• Emergency savings needs
• Other financial goals

Beyond the Basic Math: Real Affordability Factors

1. Down Payment Reality

• Conventional loans: 3-5% down
• FHA loans: 3.5% down
• VA/USDA loans: $0 down (if qualified)
• Don't forget: You still need money for closing costs (2-6% of loan amount)

2. The Hidden Costs

• Property taxes
• Homeowners insurance
• PMI (if less than 20% down)
• HOA fees
• Utilities
• Maintenance and repairs (budget 1-3% of home value annually)

3. Your Credit Score Impact

• Higher credit score = Lower interest rate = More house for your budget
• Even a 1% rate difference can affect your buying power by tens of thousands

Smart Strategies to Maximize Your Budget

Get Pre-Approved First

Know exactly what lenders will offer before you fall in love with a house outside your range.

Consider First-Time Buyer Programs

• Down payment assistance
• Reduced interest rates
• Closing cost help
• Income-qualified programs

Think Long-Term

• Will your income grow?
• Planning for kids?
• Job stability over 5-10 years?

Red Flags: When You're NOT Ready

Stop and reassess if:

• You have less than 3 months of mortgage payments in savings
• Your DTI is already above 36%
• You're relying on credit for the down payment
• You haven't been in your job for at least 6 months
• You have major debts to pay off first

Your Next Steps

1. Calculate your true budget using both the 43% rule AND your actual monthly expenses
2. Get pre-approved to understand your real borrowing power
3. Research first-time buyer programs in your area
4. Start saving for down payment and closing costs
5. Connect with a trusted real estate agent who understands your market

The Bottom Line

The "43% rule" is just the beginning. True affordability means finding a home that fits your budget today AND supports your goals for tomorrow. Don't just buy what you qualify for—buy what makes financial sense for your life.

Ready to find out what you can really afford? Let's sit down and create a personalized budget that considers all these factors, not just the basic math. Your dream home should enhance your life, not strain your finances.

Contact Shelley Broussard with Real Broker, LLC at 832-890-3504 | shelley@shelleybtxrealtor.com for a free consultation on home affordability and first-time buyer programs in Houston, TX and surrounding areas (Pearland, TX, Friendswood, TX, League City, TX, Manvel, TX, Rosharon, TX).

Equal Housing Opportunity Statement:
We are committed to fair housing and equal opportunity in housing. All real estate advertised is subject to the Federal Fair Housing Act, which makes it illegal to advertise any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or intention to make any such preference, limitation, or discrimination. We will not knowingly accept any advertising for real estate which is in violation of the law. All persons are hereby informed that all dwellings advertised are available on an equal opportunity basis.

Disclaimer: Information compiled from publicly available sources and subject to change. Prospective buyers should independently verify all details. Shelley Broussard and Real Broker LLC disclaim liability for any inaccuracies.

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