How to Calculate Your True Home Affordability Beyond the Mortgage

When most buyers think about affordability, they focus on the monthly mortgage payment. While that’s a major piece of the puzzle, it’s far from the whole picture. Owning a home comes with a variety of additional costs—some predictable, some not—that can stretch your budget if you don’t plan ahead.

The Mortgage Is Just the Starting Point

Your monthly principal and interest make up the core of your payment, but other recurring expenses tied to homeownership can add hundreds of dollars a month.

Key Costs to Include in Your Budget

• Property Taxes – These vary by location and can change over time. Make sure you know the current rate in the area you’re buying.

• Homeowner’s Insurance – Required by lenders and essential for protection. Premiums depend on location, home value, and coverage levels.

• HOA Fees (if applicable) – Monthly or annual dues for communities with shared amenities and maintenance.

• Utilities – Electricity, water, gas, trash, internet, and cable. Larger homes often mean higher bills.

• Maintenance and Repairs – A good rule of thumb is to budget 1–2% of your home’s value per year for upkeep. That means $3,000–$6,000 annually on a $300,000 home.

• Upgrades and Furnishings – From new appliances to curtains and landscaping, these can quickly add up.

• Emergency Fund – Roof repairs, plumbing issues, or a new HVAC system can cost thousands—having a cushion saves financial stress.

The Importance of Debt-to-Income Ratio (DTI)

Lenders look at your DTI when approving a loan, but you should also use it as a reality check. A low DTI doesn’t mean you can comfortably handle all the other expenses. Balance your monthly budget so housing costs don’t consume more than 28–30% of your

gross income.

How to Get an Accurate Estimate

1. Research average utility and tax costs in your area.

2. Ask your agent about typical HOA fees.

3. Use an affordability calculator that includes more than just principal and interest.

4. Pad your monthly budget by 10–15% to account for surprises.