Tiffiny Alexander
Tiffiny Alexander, RE/MAX Gold
Email: [email protected]

How Much Can I Spend on A House?

by Tiffiny Alexander 12/01/2019

Home prices may vary greatly throughout the country. But, buying a home is most likely the largest purchase you will make in your life.

Deciding just how much to spend on your home isn’t just a matter of numbers--it also depends on your lifestyle and long-term goals.

In today’s post, I’m going to give you a few ways you can help determine how much is a safe amount to spend on your home so that you’ll feel confident moving into the home buying process that you’re making the best decision for you and your family.

Mortgage as a percent of your income

Like most large purchases, buying a home typically isn’t dependent on the amount you have in the bank. Rather, it depends on several factors including your income, credit score, and the type of lifestyle you want to maintain.

One of the simplest ways to determine how much house you can afford is to figure out what percent of your monthly income your mortgage and insurance will be.

For most homeowners, a mortgage payment that is 25% of their income or less is ideal. So, if you earn $6,000 per month, you don’t want your monthly mortgage payment to exceed $1,500.

This “25% rule” does have one flaw, however, and that does not--and cannot--account for each individual’s financial circumstances.

Let’s say, for example, that you earn $6,000 per month, but that you have a large monthly car payment and are trying to aggressively pay off your student loans. You might find that paying another $1,500 toward a mortgage on top of your current bills is bringing you over budget, especially when combined with your other monthly expenses and retirement contributions.

Plan for homeowner expenses

Another caveat to determining how much to spend on a home is that the home itself will require a budget for maintenance. When renting an apartment, repairs are mostly the responsibility of the landlord or property manager.

Homeownership, on the other hand, requires you to make the repairs yourself or hire a professional. And, if you neglect these repairs, you might find that they cost you even more in the long run or drive down the value of your home.

Create a comprehensive budget

Throughout a given person’s life, they’ll experience raises, promotions, layoffs, medical expenses, childcare costs, and any other number of financial changes. While it isn’t possible to foresee all of the financial fluctuations you’ll experience in life, it is always helpful to have a comprehensive budget.

What do I mean by “comprehensive budget”? The goal of a good budget is to know where each dollar of your income is currently going and to have a plan for each cent that you make. This is a proactive approach to budgeting that will give you an exact number for the amount you can afford when it comes to a mortgage payment.

Within your budget, it’s vital to account for things like an emergency fund, retirement, savings for vacations, and so on.

If you take this due diligence, not only will you have a better sense of where your money goes, but you’ll also be confident in knowing exactly how much you can spend on a home.

About the Author
Author

Tiffiny Alexander

 

Tiffiny Alexander is an award-winning broker in both California and Arizona. She’s a wine country native, bringing more than two decades of market knowledge and industry experience to those she serves. The hallmark of her business acumen is marked by her blue-collar-work-ethic roots coupled with a cornerstone concept of always being able to put her name to her work. Tiffiny has handled an array of residential, land, and commercial real estate requisites. She is an International Certified Luxury Home Marketing Specialist, leveraging a global reach of industry relationships to better serve her clients. She enjoys the opportunity to work and play in both The Valley of the Moon (her Northern California headquarters), as well as The Valley of the Sun (her Scottsdale and Phoenix Arizona office). She’s mastered the art of connecting her clients with the American Dream of building wealth through real estate; be that primary residence, destination get-away, or cash flow investment opportunities. 

 

Tiffiny is passionate about the outdoors, art, and the architecture found in abundance throughout the Sonoran Desert as well as the wine country of Northern California. Where can she be found when not immersed in all things real estate?  Hiking or running the local trails, teaching art in the Rincon Valley School District and introducing new local artists to the community at Fulton Crossing Gallery in Santa Rosa, California. Tiffiny grew up on a ranch in Northern California well stocked with farm animals, fresh eggs, and produce, She’s a farm-to-table foodie, whether its fine dining or family-style. And while she enjoys the luxuries of a five-star resort, she’s just as happy backpacking some of the amazing places thoughtfully preserved for the nature-lover in her. 

 

Tiffiny is the founder of Cannabis Land Brokers, the flagship real estate group dedicated to helping cultivators and distributors buy, sell, and lease cannabis zoned real estate. She is committed to legal, responsible, and sustainable business practices for the industry. She works locally and nationally to connect and inform owners and growers through her work with The National Cannabis Industry Association.  

 

"Everything comes from the land. All of our stories start with some small patch of it. The soil feeds us. The earth grounds us. Vistas inspire us. Our truest sense of progress points back to our stewardship of the land.” - Tiffiny Alexander