Buying your first home is exciting, but let’s be real, it can also be overwhelming. One of the biggest hurdles for most first-time buyers is figuring out how much house you can afford and how to budget for all the hidden costs that come with homeownership.
But here’s the truth: a well-thought-out homebuying budget gives you clarity, confidence, and control. It helps you stop guessing and start planning.
Today I’ll walk you through how to create a homebuying budget that actually works for your lifestyle and financial goals—without the stress.
Understand Your Income and Expenses
Before you even look at homes online, you need to get real about your money. That starts with two questions:
- How much do you bring home every month? (That’s your net income—what’s left after taxes.)
- How much are you spending every month? (Include everything—rent, groceries, car payment, insurance, childcare, subscriptions, etc.)
Creating a simple income vs. expenses breakdown will give you a clear picture of how much room you really have in your monthly budget. And that’s the foundation for everything else.
Know What’s Included in a Mortgage Payment
When most people think about a mortgage, they think about just the price of the home. But your monthly mortgage payment typically includes:
- Principal – The amount you borrowed.
- Interest – What the lender charges you to borrow.
- Taxes – Property taxes, which vary by location.
- Insurance – Homeowners insurance (and maybe mortgage insurance too).
This is commonly referred to as PITI (Principal, Interest, Taxes, and Insurance). When you use online mortgage calculators, make sure you’re including all these pieces, not just principal and interest.
Set a Realistic Monthly Housing Budget
Here’s a rule of thumb: your total housing payment shouldn’t be more than 28% to 30% of your gross monthly income.
But listen, it’s not about what the bank says you can afford. It’s about what you feel comfortable paying every month while still living your life.
So ask yourself:
- Do I want to travel often?
- Am I planning for daycare, school, or family expenses?
- Do I want to save or invest more?
Adjust your housing budget based on your priorities. Your home should be a blessing, not a financial burden.
Don’t Forget the Upfront Costs
It’s not just about the monthly payment. Buying a home comes with several upfront costs that many first-time buyers overlook:
- Down Payment – As low as 3% with some programs, but more if you want to avoid mortgage insurance.
- Closing Costs – Usually 2% to 5% of the home price.
- Home Inspection & Appraisal – These can cost $300–$600 each.
- Move-In Expenses – Moving trucks, furniture, paint, repairs—it adds up quickly.
Start saving for these costs as early as possible. Even small, consistent savings can make a big difference when the time comes.
Build in a Safety Net
Once you know what you can afford and what you need to save, there’s one more step—protect your budget.
Make sure you have an emergency fund with at least 2-3 months of living expenses. Things break. Life changes. The last thing you want is to be financially stretched with no cushion.
Also, make sure you get pre-approved for a mortgage. It shows you’re serious, helps you stay within budget, and strengthens your offer when it’s time to buy.
Your Budget Is Your Power
Creating a homebuying budget isn’t about restrictions, it’s about empowerment. It’s the first real step toward becoming a confident, prepared homeowner.
When you know your numbers, you can make smarter decisions, avoid overwhelm, and say yes to the right home when the time comes.
Remember: this is your journey. No pressure to rush. Start where you are, take it one step at a time, and give yourself credit for every move forward.
If you found this helpful, be sure to check out my YouTube video where I break down each of these steps in more detail. And if you have questions, drop them in the comments, I’d love to hear from you!
Need help building your homebuying budget?
Schedule a free planning session with me or join our online community Dream It. Affirm It. Own It. where we talk all things credit, budgeting, and becoming a first-time homeowner.
FTC Disclaimer: This is not a sponsored video or article. All opinions are genuinely my own. This post also contains affiliate links and I earn a small commission if you make a purchase after clicking on my links. It does not cost you any extra. Thank you for your continued support to keep the Bri Callis Blog going!
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