Congratulations! You’ve made the big decision to stop paying your landlord’s mortgage and start building your own equity. That’s huge! But right away, the question on every new buyer’s mind is: How much can I actually afford?
Most people start by plugging numbers into online calculators — which is a great first step — but those tools don’t tell the whole story. Your budget isn’t just about the monthly mortgage payment; it’s about the full cost of homeownership.
Here’s a breakdown of what you need to consider:
The Down Payment
The most famous hurdle. While 20% down is the traditional goal to avoid Private Mortgage Insurance (PMI), many first-time buyer programs and FHA loans allow as little as 3-5%. The key? Start saving early and explore all your options.
Closing Costs
These are the fees you pay at the end of the deal to finalize your purchase. Typically 2-5% of the home price, they include appraisal fees, title insurance, legal costs, and more.
The “PITI” of It All
Your monthly payment isn’t just principal and interest — it also includes:
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Principal & Interest: Your actual loan repayment.
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Taxes: Property taxes vary by location and can be a significant chunk.
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Insurance: Homeowners insurance protects your investment. If your down payment is under 20%, PMI may also apply.
Ongoing Maintenance & Unexpected Costs
This one surprises most first-timers. That leaky faucet or broken furnace? Now it’s your responsibility. I recommend setting aside 1-2% of your home’s value each year to cover these inevitable expenses.
By looking at your finances from this full perspective, you can build a realistic budget — so your first home brings joy, not financial stress.
Budgeting for your first home goes beyond the sticker price. Being prepared for all the costs helps you make confident decisions and enjoy your new space without surprises.
Want expert help to build a budget that fits your life? Need some advice on navigating first-time home buying costs? Reach out anytime — I’m here to guide you every step of the way.
