RE al Life How Much House Can I Afford?

That’s a tricky question because there’s no onesize-fits-all answer to it. But the exact amount depends on your personal circumstances.

Experts at REALTOR. com recommend that buyers don’t spend more than 28% to about a third of their gross income, which is how much they earn before taxes, on their monthly mortgage payments. These payments typically include property taxes, insurance costs, and homeowners association fees. That percentage can still be too high for many first-time buyers. Unfortunately, this may mean postponing homeownership or purchasing a cheaper property. Stressed-out first-time buyers eager to get on the property ladder might not appreciate this advice, however, buying—and owning—a home is so much more expensive than one might think. While many people buy homes to keep their housing costs fixed, property taxes, home insurance, and HOA fees can rise substantially over time. In fact, many local governments are now planning to raise to get their bite of rising home values over the past few years. In addition, insurers stretched thin by the steady parade of natural disasters are raising rates in many areas. All of these contribute to why buyers should not max out their payments. You need to make sure that you have more than enough each month to pay for child care, health care, or whatever else life throws at you.

Here are a few examples of hidden costs that come with buying and owning a home—and a couple of tricks for saving money where you can.

Energy usage — Energy costs are generally higher in a four-bedroom house than in a one-bedroom apartment. Energy costs can be as much as triple during the winter months. There are things that could be done to lower it such as changing out our windows and insulating the eaves in our home. Sadly, these improvements can run tens of thousands of dollars. Improvements that would only end up saving a few percentage points on our monthly energy bills.

Home maintenance — Another item to be considered is just how much maintenance a home actually requires. Gutters have to be cleaned, boilers need tuneups, and lawns must be seeded and mowed. Some of it can be done by the homeowner, but some of it requires calling in professionals. If homeowners let small problems become larger ones, they generally cost more to fix.

Unexpected repairs — Then there are the unforeseen repairs, such as basements that flood, electrical issues, and tubs that need caulking to prevent water damage. Landscaping can also be an issue that will sneak up and need attention to avoid causing harm to the outside of the home.

Replacement of big-ticket items — Major appliances and home systems have a shelf life, which means eventually they will die. No one wants to be saddled, unexpectedly, with springing for a new stove or dishwasher—or even a dreaded roof replacement. These items aren’t cheap.

Home furnishings and decorations — These costs are on top of any furniture you’d like to buy, walls you’d like to paint or wallpaper, and landscaping work you’d like to have done. That’s why it’s important to have as large of a financial cushion as possible.

Lenders may offer more money, buyers don't need to take it — Lastly, lenders may offer more than you can afford. You might be thrilled if you find a lender who qualifies you for a loan large enough to buy the house of your dreams. But think carefully before you take the offer. Make sure there’s enough room in your budget for larger mortgage payments, maintenance, repairs, and unexpected replacements, as well as the cost of just living. You might need childcare, have to replace an aging vehicle, want to go on vacation, or go to a game once in a while. And you shouldn’t forget that inflation means your expenses will likely continue to rise.

That’s why it’s more financially prudent to purchase a property with manageable monthly mortgage payments, even if it’s not your absolute dream home. After all, no one wants to be house poor.