How Much House Can You Afford?

One of the biggest questions buyers ask is “How much house can I actually afford?” The answer depends on your income, debts, down payment, and overall financial goals.

Financial experts recommend using simple guidelines to determine a suitable housing budget. Here at The SELLING Team with Keller Williams, we are Trusted by Ramsey, so we can provide guidance on what your payments should look like.

According to Ramsey Solutions, a helpful rule is to keep your monthly housing payment at or below 25% of your take home pay. Following this guideline can ensure your home is a blessing and not a financial burden.

The 25% Rule

A common recommendation is to spend no more than 25% of your monthly take home pay on housing costs. When calculating, it's important to include not only your monthly house payment, but also the mortgage principal and interest, property taxes, homeowners insurance, and in some cases, homeowners association (HOA) fees. Looking at the full picture will ensure you can comfortably afford your home and all expenses without adding financial stress.

Using these guidelines can help prevent you from being “house poor” where too much money is going toward your home and too little is going toward other financial priorities. Starting with a realistic budget allows you to search for a home confidently.

Consider Your Down Payment

Your down payment has a major impact on how much house you can afford. Saving at least 20% for a down payment reduces your loan amount, eliminates private mortgage insurance (PMI), and sets you up for smaller monthly payments.

Don’t Forget Closing Costs

Your down payment isn't the only upfront cost when buying a home. Closing costs include appraisal fees, home inspection, title services, etc. On average, closing costs usually equal up to about 3-4% of the home’s purchase price and you need to pay them in cash.

Budget in Homeownership Costs

Owning a home involves more than just a monthly mortgage payment. You should also prepare for increased utilities, Ramsey Solutions suggests to budget about $600 a month for utilities in a home. You also have to budget for maintenance and repair fees, this can include things such as HVAC or landscaping. Now, a bigger expense is furnishing and upgrades, so budget for those ahead of time if you're planning on making changes when you move in. The average cost to furnish a house is around $16,000, and remodeling a kitchen can cost over $20,000.

Work With The Right Real Estate Agent

Figuring out how much house you can afford before purchasing is the most important step in beginning your house search. Working with an experienced real estate professional with The Selling Team with Keller Williams can help you understand local home prices, financing options, and your buying power.

As Ramsey Trusted real estate professionals, we follow proven principles that prioritize responsible homeownership with long term financial stability. This means helping clients find the best home fit for their budget and lifestyle.


Written by Jada Mohon
The Selling Team with Keller Williams Realty