How Much House Can I Afford? A Worksheet for First-Time Buyers
A lender will tell you the maximum you can borrow. Your job is to find the amount you can pay comfortably, month after month, with money left for everything else.
Step 1: The real monthly payment
A mortgage payment usually includes more than principal and interest. Add up:
- Principal and interest
- Property taxes
- Homeowners insurance
- Mortgage insurance (often required with a smaller down payment)
- HOA dues, if any
Step 2: The costs of owning
- Utilities (often higher than in an apartment)
- Maintenance and repairs; many people budget around 1% of the home's value per year as a rough guide
- Furniture, lawn, snow removal
Step 3: Rules of thumb
Lenders look at your debt-to-income ratio (DTI): monthly debt payments divided by gross monthly income. A traditional guideline is housing costs of no more than about 28% of gross income and total debts of no more than about 36%. Many loans allow more. Ask what you'd be comfortable with if your income dropped.
Step 4: Cash to close
- Down payment
- Closing costs: lender fees, title, prepaid taxes and insurance (your Loan Estimate shows this)
- Inspection and appraisal
- Moving costs
- An emergency fund left over after closing
Step 5: Stress-test it
- What if property taxes or insurance go up?
- What if one income stops for three months?
- Could you still save for retirement?
A simple worksheet
| Amount | |
|---|---|
| Take-home pay per month | |
| Current spending (without rent) | |
| Savings goal per month | |
| Left for housing |
General information, not financial advice. Talk to a HUD-approved housing counselor for free or low-cost help.
The First-Time Home Buyer Binder has an affordability worksheet and a cash-to-close calculator in the tracker.
First-Time Home Buyer Binder — $17
18-page binder from pre-approval to closing: affordability worksheet, Loan Estimate comparison, showing scorecard, inspection, wire-fraud check and closing day. Instant download: PDF + DOCX + XLSX.
Get the First-Time Home Buyer BinderFamily Paperwork Bundle — $34More guides
- First-Time Home Buyer Checklist: 10 Steps From Savings to Keys
- Mortgage Pre-Approval Documents Checklist
- How To Compare Loan Estimates (Line by Line)
- House Hunting Checklist: What To Check at Every Showing
- Home Inspection Checklist for Buyers: What To Ask and Look For
- Closing Disclosure Checklist: What To Check Before Closing
- Real Estate Wire Fraud: How To Protect Your Down Payment
- Final Walkthrough and Closing Day Checklist for Buyers
- First Month as a Homeowner: The New Owner Checklist