Assess your finances
Before house hunting, get a clear picture of your money. Look at your monthly income and expenses so you know what kind of mortgage payment fits comfortably into your life.
Get pre-approved
Start by adding up your annual income and dividing by 12. If you’re self-employed, use the net income from your latest tax return. Grab your pay stubs and tax docs now so you’re ready when it’s time to apply.
Build a simple budget
A common rule is 50/30/20:
50% for needs, 30% for wants, 20% for savings.
Your mortgage falls into “needs,” so make sure your budget can handle a payment around $1,500 to $2,000 per month or whatever range fits your area.
Know your debt-to-income ratio
Lenders compare your monthly debts to your income. Most want this under 43%, with 35% or lower being ideal. If you’re high, paying down a car loan or credit card can boost your buying power.
Use quick calculators
A debt-to-income or home affordability calculator can give you a fast snapshot of what you can realistically afford.
Follow the 28/36 rule
Try to keep housing costs under 28% of your gross income and total debt under 36%. It’s not a hard rule, but it’s a solid guide when deciding your price range.