Determine Your Budget
Before you buy a home, it’s important to determine what you can afford. You’ll be responsible for the monthly mortgage payments, plus home insurance, maintenance expenses, and possible homeowner association fees.
Saving money to pay for your down payment is important. Lenders have different requirements for down payments, but generally, the higher your down payment, the lower your monthly payments will be. Calculate your monthly income and expenses to see what you can afford for your housing budget. Lenders typically recommend that consumers’ monthly mortgage and housing expenses not exceed 30% of gross monthly income.
- Calculator: How much will my fixed-rate payments be?
- Find out what your total monthly housing cost would be, including taxes and homeowners insurance.
- Contact your lender and/or insurance agent for an insurance estimate and guidance regarding Homeowner’s insurance, title insurance, and private mortgage insurance (PMI).
- Ask your bank or lender how much closing costs are likely to be.
- Add those together and you’ll know about how much your total monthly payments will be.