Can I Afford to Buy a House?

Owning a home is a dream for many, offering stability, investment potential, and pride in having a space to call your own. But with rising property prices and economic uncertainty, that dream can sometimes feel out of reach. The question, “Can I afford to buy a house?” is one every aspiring homeowner needs to answer confidently.

This guide is here to help. We’ll break the process into clear, actionable steps, helping you assess your financial readiness, understand key considerations, and make informed decisions about purchasing your first home.

Assess Your Financial Situation

Before you start imagining your dream home, it’s crucial to take a hard look at your finances. Understanding exactly where you stand financially will set the foundation for determining what you can afford.

1. Calculate Your Income and Expenses

Start by listing your monthly income and all current expenses. Be thorough by including fixed costs (like rent, utilities, and loan payments) and variable costs (like groceries, travel, and entertainment). Tools like budgeting apps can simplify this process. What remains after subtracting expenses from income is your potential budget for a mortgage payment.

2. Review Your Credit Score and Debt

Your credit score is a critical factor in securing a mortgage. Not only does it influence whether you qualify for a loan, but it also directly impacts the interest rate you’ll receive. Most conventional loans generally require a score of 620 or higher. However, if your score is lower, options like FHA loans might be available. The takeaway here is clear: the higher your credit score, the better your chances of getting a lower mortgage rate.

In addition to your credit score, lenders will assess your debt-to-income (DTI) ratio. This ratio compares your total monthly debt payments to your gross monthly income. Ideally, lenders prefer a DTI below 36% to ensure you’re not overextending your finances. While some lenders may approve loans with a DTI up to 43% and FHA loans can also sometimes accommodate a DTI as high as 50%, the lower your ratio the better.

3. Determine Your Savings

Buying a new home involves upfront costs, including a down payment (typically ranging from 3% to 20% of the home’s price) and closing costs (usually 2%–5% of the loan amount). For example, purchasing a $300,000 home may require a down payment anywhere from $9,000 up to $60,000 and up to $15,000 for closing costs. Make sure you’ve saved enough to cover these expenses and still retain an emergency fund.

Some homebuilders like CB JENI Homes have incentives that can help with closing costs or to buy down your rate. Click here to find out more about current incentives and savings offers. 

Understand Mortgage Basics

Not all mortgage loans are alike. Knowing the various options can help you find the one that fits your needs. It’s important to research your options and find the right loan for you. If you’re a Veteran or currently serving in the military, you may quality for a VA Home Loan and may be able to take advantage of downpayment assistance.

Interest rates directly impact your affordability. A lower rate means smaller monthly payments, so improving your credit score or paying a higher down payment can help secure better terms. Before house hunting, consider getting pre-approved by a lender. This provides a realistic idea of your budget range and shows sellers you’re a serious buyer.

Calculate How Much House You Can Afford

1. Use Online Calculators

Mortgage calculators are a user-friendly way to estimate how much house you can afford. Input details like home price, down payment, loan term, and interest rate to see your estimated monthly payments.

2. Apply the 28/36 Rule

Financial experts recommend following the 28/36 rule:

• Your monthly housing costs (mortgage, insurance, property taxes) should not exceed 28% of your gross income.
• Your total monthly debt, including the mortgage, should not exceed 36% of your gross income.

For example, if your monthly income is $5,000, you should aim to spend no more than $1,400 on housing and $1,800 on total debt payments. This ratio is flexible, but it’s important to know how your mortgage will affect your overall budget and lifestyle.

3. Don’t Forget Additional Costs

Homeownership involves more than just your mortgage payment. Account for property taxes, homeowners insurance, private mortgage insurance (PMI), HOA fees), and maintenance costs in your budget.

Explore Financing Assistance Programs

If all the upfront cost  feels overwhelming, don’t worry. Many new construction homebuilders offer financing incentives and programs designed to help homebuyers:

• Homebuilder Incentives: Often homebuilders, like CB JENI Homes, offer incentives that can help lower rates and even pay down closing costs.
• Federal Programs: FHA, VA, and USDA loans can help minimize upfront costs.
• Eligibility: Check the requirements for these programs, which often depend on income and location.

Evaluate Your Readiness

1. Are My Finances Stable Enough for This Responsibility?

Homeownership comes with upfront costs like your down payment and closing costs, as well as ongoing responsibilities like mortgage payments, insurance, and maintenance. The big question: Do you have enough savings and a steady income to comfortably handle it all? If you’ve been building your emergency fund, budgeting well, and feel financially grounded, you might be more ready than you think!

2. Do I Plan to Stay in the Same Area for the Next 5+ Years?

Stability in location is often ideal, but it’s not always realistic—life happens. The good news? Even if you’re unsure about your five-year plan, homeownership can still be a smart move.
Why? Because you can always rent out your property later. It could become an income-generating asset, giving you flexibility and long-term value.

3. Does This Align with My Long-Term Goals?

Think about where you want to be in the next 5, 10, or even 20 years. If building equity, creating stability, or investing in your future are part of that vision, homeownership is a powerful step in the right direction.
It’s more than a roof over your head—it’s an investment in yourself.

Seek Expert Advice

Working with a trusted real estate agent can provide valuable insights into the local housing market.  If you’re looking to get pre-approved – you can speak with a lender or take advantage of current incentives and speak to a CB JENI Homes preferred lender (may vary by community).

Take the First Step Toward Homeownership

Buying a home is a major life decision, but with careful planning and a clear understanding of your finances, it can become an exciting and attainable goal.

Start by assessing your budget, researching mortgage options, and exploring assistance programs. Remember, knowledge and preparation are your strongest tools.

Take the first step today by using a free online mortgage calculator to see how much home you can afford. From there, consult a financial advisor or real estate professional to put your plan into action.

Find Your Dream Townhome with CB JENI Homes

At CB JENI Homes, we are dedicated to helping first-time homebuyers like you discover the perfect townhome. Our expertly designed communities offer the ideal blend of modern comfort, convenience, and style to fit your unique needs and lifestyle.

With our townhomes, you’ll enjoy low maintenance living in vibrant urban and suburban locations, giving you the freedom to focus on what matters most. Each of our homes is thoughtfully crafted with energy-efficient features, open floor plans, and high-quality finishes to ensure long-term value and satisfaction.

We also provide resources and guidance to simplify the buying process. Whether you’re navigating mortgage pre-approvals or choosing between neighborhoods, our team is here every step of the way to empower you with the knowledge and tools you need to make confident decisions. Take the next step today and explore the available CB JENI Homes communities near you. Secure your future and turn your first home dream into a beautiful reality!