Ready to get started? Great! But there are a few things to keep in mind. How much home you can afford—and whether or not you’re ready to buy a home at all, are complex topics. Here’s how you can get started.
It takes hard work, time, and planning to buy a home. And there’s a lot to consider. Things like location, your budget, and how much home you can afford, all play an important role in your situation and whether you’re even in a good place to buy a home.
To buy a home, the first step is to understand how much home you can afford. Get started by playing around with our handy mortgage calculator to get an idea where you’re at.
Crunch Those Numbers
The typical range for down payments on conventional loans is 5–20% of the total home value but it can vary based on loan type, credit, and other factors. There is a wide range of down payment options and many different types of loans. VA loans and FHA loans are very popular and may have a lower up-front cash requirement.
Explore Loan Types
Congratulations, when you buy a home, you get promoted to Director of Repairing Stuff. No more calling the landlord to handle it. So it’s a good idea to have money set aside for maintenance. In a fixer-upper, the fixing adds up fast.
A good real estate agent will be able to help you to buy a home with all the right stuff, or help make sure you won’t be stuck with a broken-down air conditioner as soon as you move in. Knowing how much home you can afford also means knowing how much repair cost you can cover.
Your monthly mortgage payment is normally made up of the principal (the amount you borrowed) plus interest at your mortgage’s current rate. If you have an escrow account to pay your property taxes and homeowner’s insurance, your monthly escrow contribution is included too.
With some property types, such as condos or planned unit developments, you might also be required to pay homeowner’s association dues. These fees are not included in your monthly payment.
Learn About Escrow
Do you know which neighborhoods you’d like to live in? Shopping online can give you a great sense of not only how much home you can afford, but what neighborhoods are in your price range.
Even if you aren’t ready to buy a home right now, shopping around and keeping up to date with housing prices will help you decide where you want to shop when it’s time to get serious.
Once you figure out how much home you can afford, a real estate agent can help narrow your search and negotiate your offer. Sometimes they can even get the seller to cover certain repairs or a portion of the closing costs.
Mr. Cooper Agent Assurance connects you with local real estate agents from trusted firms like Century 21 and Coldwell Banker. With a 98% customer satisfaction record, these agents have the experience and expertise to make your home-buying journey stress-free.
Ready to find your new home? If you haven’t already, try out our loan amount calculator to get an estimate of what you’ll be able to borrow. From there, you can start thinking about how much saving you need to do and the budget that can get you there.
Besides your total loan amount, you should also think in terms of the monthly payment you’ll be making. We’ve got a calculator for that, too.
Loan Amount Calculator