How Much Home Can You Afford?

So you’re ready to buy a home. Whether you’re eager to dive right into the search or not sure what your first step should be, Landsea Homes is here to guide you on a successful home buying journey with six simple steps.

Step 1: Calculate Income

Before you get to Zillow, the first thing you want to do is determine how much house you can really afford. Start with figuring out your total household income each month, including your salary, investments or any other money coming in on a regular basis. This will help establish your baseline for what you can comfortably afford each month.

Step 2: Determine Debts/Expenses

Once you’ve determined your income, the next step is to account for any debt and monthly expenses, such as credit card bills, car payments, student loans, groceries, subscriptions, gym memberships, etc. This is also where you want to add up any ongoing expenses you’ll come across once you’ve officially become a homeowner, which could include property taxes, insurance, HOA or co-op fees and utilities.

Step 3: Establish Monthly Payment Amount

It’s important to be as realistic as possible with your monthly payment amount. The last thing you want to do is get yourself into a 30-year loan that you can’t comfortably handle. It doesn’t hurt to keep in mind that you will want a cash cushion, or emergency fund, in case of any expensive maintenance or unexpected fees that may suddenly break your budget. Life happens—so it’s best to be prepared.

Lifestyle changes can also make a huge difference when it comes to purchasing a new home. A little bit can truly go a long way. Considering a mortgage loan is amortized over 30 years, we can calculate that every $5 you can afford to add to your monthly mortgage payment can ultimately raise your home buying budget by $1,000. Giving up $50 per month at Starbucks could increase your price point by $10,000. And saving $100 per month by cooking at home more often than eating out could increase your price point by $20,000!

Step 4: Decide Down Payment Amount

Now that you’ve considered the monthly payments that come with being a homeowner, next is to determine what kind of down payment you can comfortably afford with your savings, investments or other sources of income. You want to put as much money down as you can without exhausting your finances for move-in expenses, closing costs and, of course, the cost of living.

Once you have ballpark numbers, we have plenty of virtual tools, such as the mortgage calculator, to help you easily qualify yourself for the home you’re looking for and make sure it’s within your budget.

NFM Lending Calculators >>

Step 5: Get Pre-Qualified

You should now have a general idea of how much you can invest in your journey toward homeownership. Now it’s time to get pre-qualified, which happens to be the first essential step of the home buying process. Getting pre-qualified with an experienced mortgage loan originator will give you a more accurate idea of how much you can truly afford. Lucky for you, Landsea Homes’ preferred lenders are the best in the business. NFM Lending is known for its simple online application process.

Pre-qualification is where you’ll get an estimate of how much the lender is willing to lend you and at what interest rate, which is heavily based on your credit score and the amount of debt you owe. That’s why it’s important to take any opportunity you can to boost your credit score and make sure that the amount of debt you have, if any, is manageable before deciding to buy a home.

NFM Lending Loan Application >>


Step 6: Start Your Home Search

Once you know your price range, then you can start looking for a home that suits your lifestyle. There are many things to consider in order to find the best value for you and your family, especially when looking toward the future. If you have plans to grow your family or have in-laws move in or college students move out, you’re going to want a home with the flexibility to meet your evolving needs and accommodate everyone in your household at any time.

Plus, with the current trend of working from home having the potential to change the future of employment everywhere, there may be things you’re now considering for your forever home that you hadn’t before. It may be beneficial to search for a floor plan that has the right spaces to make your extra time spent in the house more comfortable or fun. Whether you need a place to set up an office or two, a home gym or even a play area, be sure to think about how you want your home to work for you during your search.

Whatever you may be looking for in a new home, Landsea Homes has a wide range of communities in Southern California, Northern California, Arizona, Texas, Florida and NYC Metro with price points that suit everyone from first-time homebuyers to empty nesters.

Learn more about the mortgage process on our website and Like us on Facebook and follow us on Instagram to keep up to date on all the latest news and updates from Landsea Homes.