1. Calculate 30% of your monthly take home pay-
A good rule of thumb is to not let your monthly mortgage payment exceed 30% of you net take-home pay to avoid being house poor.
2. Determine Final Purchase with Online Calculator-
Back into your total mortgage budget using your number from step 1 by playing with numbers using an online calculator with various downpayment amounts, interest rates etc.
3. Estimate Closing Costs-
Don't forget to factor closing costs into your total home budget! These are often overlooked. Ask your lender for a detail list of closing costs so that you are prepared..
4. Factor Additional Homeownership Costs into Your Budget-
With homeownership comes additional expenses- utilities, repairs maintenance, supplies, etc. Don't forget these!
5. Save For Your DownPayment-
Aim to save at least 5% for a down payment. You can avoid PMI by making a 20% down payment on a conventional loan. The best route is a 15-years, Fixed-rate conventional loan if you really want to save. .
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