Home Buying Guide
The biggest purchase of your life deserves a plan.
How Much House Can You Afford?
The banking industry will pre-approve you for far more house than you should actually buy. Just because a lender says you qualify for a $400,000 mortgage doesn't mean you can comfortably afford one. The 28/36 rule is the reality check.
Housing Costs
Your total monthly housing payment (mortgage, taxes, insurance, HOA) should not exceed 28% of your gross monthly income.
Total Debt
Your total monthly debt payments (housing + car loans + student loans + credit cards) should not exceed 36% of your gross monthly income.
Example: If your household earns $6,000/month gross, your housing payment should stay under $1,680 (28%), and your total debt payments including the mortgage should stay under $2,160 (36%). If you exceed either number, you're house-poor.
Down Payment Strategies
The traditional advice is 20% down. That's $60,000 on a $300,000 home. For most first-time buyers, that number feels impossible. The good news: you don't always need 20%. But you should understand the tradeoffs.
Putting less than 20% down typically means paying PMI (Private Mortgage Insurance), which adds $100-$300+ per month to your payment. PMI protects the lender, not you. Some loan programs (FHA, VA, USDA) have lower down payment requirements but come with their own fees and restrictions.
Our recommendation: save enough for 10-20% down if possible, but don't drain your entire emergency fund to get there. A $15,000 down payment with a $10,000 emergency fund is better than a $25,000 down payment with $0 in savings. Because the first thing that will break in your new house is going to cost money.
Credit Score Requirements
Your credit score directly impacts the interest rate you'll get, which over a 30-year mortgage can mean tens of thousands of dollars in savings or extra cost.
740+
Best Rates
You'll qualify for the lowest available interest rates. This is the target.
620-739
Qualified
You can get a conventional loan, but your rate will be higher. Every 20-point increase saves money.
Below 620
Limited Options
FHA loans may still be possible (minimum 580), but rates will be significantly higher. Build credit first.
Steps Before Buying
Check your credit score and dispute any errors on your report
Pay off high-interest debt (Step 4: The Debt Kicker)
Build 6-8 months of expenses in emergency savings (Step 5: The Safety Anchor)
Save 10-20% for a down payment in a separate account
Get pre-approved for a mortgage before you start looking at homes
Calculate the true monthly cost: mortgage + taxes + insurance + maintenance + HOA
Keep your debt-to-income ratio below 36% after the new mortgage payment
Planning to Buy? Let's Make Sure You're Ready.
A home is the biggest financial decision most people make. Book a free consultation and we'll help you build a timeline, savings target, and credit improvement plan so you're ready when the right house appears.