Finding the right home means balancing your needs and wants with a price point you can truly afford. Making a list of must-haves while determining a comprehensive housing budget will go a long way toward preparing you for the search. If you’re ready to get started, we’ll help you work out the details so you can house-hunt with confidence.

Consider your finances first.

The financial considerations of buying a home can be intimidating, but that’s where we come in. Here are some simple factors to consider before you start looking for your dream house.

How much house can you really afford?

Keep in mind that buying a house means more than just a monthly mortgage payment. Weigh each of the following considerations to get a good idea of your true housing budget.

Down payment

Financial experts often suggest putting 20% down when purchasing a home, if you’re able. A 20% down payment will increase your odds of approval, qualify you for lower interest rates and insurance fees and allow you to maintain a lower mortgage payment. But there are many different kinds of loans (FHA, VA, USDA and Fannie Mae HomeReady, for example) that will allow you to purchase a home with a much smaller amount down. Deciding how much you’re able to put toward your down payment is the basic first step to understanding what you can afford.^{1, 2}

Additional mortgage costs and fees

Often when first-time home buyers are in the market, they forget the additional costs associated with purchasing a house. It’s important that you factor in property taxes, homeowners insurance, homeowners association (HOA) fees, if applicable, and any other costs associated with living in your specific building, neighborhood or development.

Maintenance and repairs

Once you become an owner, you’ll be responsible for any maintenance your home requires. So if the plumbing needs work or the HVAC needs to be replaced, you’ll want to have the funds in place to finance those repairs. There are two basic rules of thumb you could apply to this. One is the 1% rule: estimate that you’ll be spending approximately 1% of your home’s purchase cost per year on maintenance. (Some experts suggest it should be closer to 3%—it will likely depend on the current condition of your home, the weather in your area and other market factors.) So, if your home costs $250,000, you’ll need about $2,500 per year for repairs and upkeep. The other way of budgeting for maintenance is the square-footage rule: estimate that you’ll spend about $1 per square foot per year. That means if your house is 2,000 square feet, you’ll spend about $2,000 per year on maintaining it. Make sure your projections include saving funds to cover both consistent and surprise costs, from yard maintenance to roof repairs, without causing undue stress.³

Moving costs

Don’t forget to include your move-in costs. Think about movers, utility set-up fees and any new furniture or appliances your new home needs to be livable, and add these expenses to your comprehensive budget.⁴

Utilities

What is the combined cost of gas, water, electric, trash and recycling service in your new home? Add those to your budget, too, so you aren’t caught by surprise.⁴

Get answers to some of your other questions about homeownership and reach out to a loan officer any time to learn more about the expenses you need to keep in mind.

Look for a home that meets your specific needs.

A house is a financial investment—but it’s also a central part of your life and your family’s lives. Make sure you’re thinking about your personal priorities to ensure you get into a home you love.

Does it fit your five-year plan? What about your 10- or 20-year plan?

It doesn’t matter how much you love a house or neighborhood—if it doesn’t meet your needs, you probably won’t be happy in the long run. Think about what would make a house comfortable for you. Consider how many bedrooms you’ll need, both now and later, if you’re planning to have children or take in an aging parent. And here are some other things to consider:

• Does it have enough parking?
• If you have a dog, is there a fenced-in yard, or the potential for one?
• Do you need a home office?
• Is there sufficient storage/space for the items that matter most to you? (Consider everything from closet space to boat storage.)
• Will the kitchen meet your cooking/entertainment needs?
• Will you retire in this home? If so, can you easily navigate the space as you age? ^5,6

Does the area have what you need?

Pick a house you love, but pick a neighborhood you love, too. You’ll want to live somewhere you feel safe and comfortable, but there are some other practical factors to weigh, too, like:^{7, 8}

• Can you access what you need? Think about groceries, gyms, vets, etc.
• Does it have the community atmosphere you’re looking for? 
• Is it urban? Suburban? Rural? 
• How long is the commute?

Does it match your personal style?

Maybe the house has a lot of the basics you want but needs all-new appliances. Or maybe the kitchen needs to be enlarged. Maybe the yard is big enough, but you really need a fence for your kids or dogs.⁷ Write it down:

• What’s working or not working?
• What would need to change to make it right for you? 

Can it deliver on your daily lifestyle?

What is really important to you on a day-to-day basis? When you picture yourself living in the home, are you entertaining lots of guests on a deck? Are you cooking with the whole family around the kitchen counter? What aspects of your lifestyle does the house need to deliver on? Here are some ideas to get you thinking:

• Is having coffee on the porch important?
• What about grilling in the summer?
• A soaking tub to relax?
• Do you need covered parking to contend with snow, hail or extreme heat?
• Enough bathrooms to avoid chaotic mornings?

Consider your average, everyday routines and determine if the house you want will fit the way you really live.^{7, 8, 9}