Jeni VanOrnum | Real Estate Insights & Education

Determining your home budget is crucial, but it’s about more than just the purchase price. Here’s how to calculate what you can truly afford.

The 28/36 Rule

Lenders typically use this guideline:

• Your housing costs shouldn’t exceed 28% of your gross monthly income
• Your total debt shouldn’t exceed 36% of your gross monthly income

Beyond the Mortgage Payment

Many first-time buyers forget to factor in:

• Property taxes (1-2% of home value annually)
• Homeowners insurance ($800-$1,500+ per year)
• HOA fees (if applicable)
• Maintenance and repairs (budget 1-2% of home value annually)
• Utilities
• PMI if putting down less than 20%

Calculate Your Comfortable Payment

Start with your take-home pay, subtract all current expenses, and see what’s left. Can you comfortably handle the additional housing costs and still save for emergencies?

Don’t Forget Closing Costs

Budget 2-5% of the purchase price for closing costs. Some programs allow seller concessions to help cover these.

The Pre-Approval Reality Check

Lenders might approve you for more than you’re comfortable spending. Just because you can borrow $400,000 doesn’t mean you should.

Consider Your Lifestyle

Do you travel frequently? Have expensive hobbies? Want to save aggressively? Your home payment shouldn’t compromise your quality of life.

Working Together

When we discuss your home search, I’ll help you understand the total cost of ownership in different neighborhoods and price ranges.