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How to avoid buying more house that you can afford

How To Avoid Buying More House Than You Can Afford

So you’re starting the process of buying a home! 

It’s hard not to get caught up in the excitement of this major purchase. However, it’s crucial that you tread lightly and do your due diligence before committing to something that might be outside of your budget. 

Remember, just because your mortgage score qualifies you for a mortgage doesn’t mean you should commit to the high end of what your score says you can afford. Seeing a beautiful home or condo can cause us to throw logic out the window. However, you certainly won’t be able to enjoy your new space if you are overburdened with hefty mortgage payments.  

Are you asking yourself: ‘How much mortgage can I afford?’ If so, here are a few tips on how to avoid buying more house than you can handle. 

Beware of Homeowner Association Fees

Homeowner Associations (HOAs) can certainly help homeowners avoid headaches and tedious responsibilities. They can also help manage the upkeep of shared amenities. 

But before you buy a home in a managed community, you’ll need to make sure you have a clear understanding of the associated HOA fees. Factoring in these fees will help you determine the home affordability of the property. A recent study by Trulia found that HOA fees vary quite dramatically, and the increase in HOA fees over time has been outpacing the increase in home prices. These fees may end up impacting the affordability of your home dramatically.

Factor In Hidden Fees

Many people who have done their due diligence still end up with a mortgage they struggle to carry. This is often because they forgot to factor in or they underestimate hidden fees. Underestimating hidden fees, as well as the ongoing costs associated with maintaining a home, are common reasons for buyer’s remorse. 

Daryl Fairweather is the chief economist of the real estate website, Redfin. He cautions home buyers to “do a full check of all finances, a lot of hidden fees come with owning a home that you might not consider immediately.” These hidden costs are a huge part of determining home affordability. 

So, when you are doing your final calculations, you need to include all the common costs that are associated with homeownership, including: 


If you’re buying a new home you will, no doubt, be making a major investment. Make sure you take the proper steps in order to protect that investment by taking out insurance on your home. Before you go forward with a sale, do some preliminary research on insurance costs and be sure to factor this into your budget. 

Renovation & Maintenance Costs 

Your home may or may not need renovations; however, it will certainly need to be maintained. Maintaining your home, as you’ve probably guessed by now, will cost you. Talk to others who own similar properties to get a sense of how much you’ll need to set aside on a monthly basis in order to maintain your home properly. Add this amount to your budget to see how it impacts your home’s affordability.

Closing Costs

Most people know that closing costs are coming when they purchase a home, but many are blindsided by this expense. Talk to your real estate agent to make sure you have a good idea of what to expect for closing costs. 

Property Taxes 

Property taxes are another expense many first-time homeowners forget to factor into their budgets. Rates vary depending on where you live, so look into the tax rates in your state or province to get a clear understanding of how much you’ll pay annually.  

The Expenses Are in the Details 

Remember, the above costs combined may amount to upwards of 5% of the price of your home. So, don’t make the common mistake of forgetting to factor them into your financial planning—or else, you may end up paying for that mistake for years to come. 

No matter how beautiful your home is, the stress of carrying a mortgage you can’t afford will likely prevent you from enjoying it. 

How Home Lending Pal Can Help 

Traditional mortgage calculators don’t always help prospective homeowners factor in all of the necessary considerations. This is where Kev comes in. This AI-powered Mortgage Advisor helps you assess your options with zero pressure. We pull in and verify finances to paint a more vivid picture of what homeownership will truly look like for you based on liquid assets and recurring income. It is crucial to have an understanding of this before submitting your mortgage application. 

For more information on how Home Lending Pal can help you with your home buying journey, check out our FAQ page and check out more articles on our Mortgage Blog.

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