How much house can you afford?
Key takeaways:
- Focus on a monthly payment that fits your real life — not just the list price. Use a home affordability calculator to help set your budget.
- Remember the full cost of homeownership (taxes, insurance, utilities, upkeep, and possible HOA fees), not just the mortgage.
- Preapproval helps you understand your buying power and makes your offer more attractive to sellers.
Buying a home is exciting — and a big financial decision. The easiest way to avoid stress later is to set a clear housing budget before you start shopping. When you know your numbers, you can narrow your search, make stronger offers, and focus on homes that truly fit your life.
1. Start with a realistic monthly housing budget.
Instead of starting with a home price, start with a monthly payment you can live with for years. That payment should include:
- Mortgage (principal & interest)
- Property taxes
- Homeowners insurance
- Private mortgage insurance (PMI) if you put less than 20% down
- Homeowners Association (HOA) dues (if applicable)
A good test: after covering your housing and your other monthly debts (like car loans, student loans, and credit cards), you still want enough room for savings, everyday spending, and surprises, like car repairs, a friend’s wedding or kids’ sports.
| Worksheet: How much house can I afford? | (fill this in) |
|---|---|
| Your monthly income (before taxes): | ___________ |
| Essentials (food + transportation + childcare, etc.): | - ___________ |
| Savings goal (emergency fund + retirement, etc.): | - ___________ |
| Other debts (car + student loans + credit cards): | - ___________ |
| Comfortable housing payment target (what’s left for a payment you could sustain long term): | = ___________ |
Tips:
Pick a monthly number that feels comfortable on a “regular” month and still works on a “busy” month (holidays, travel, back to school, etc.).
2. Understand how lenders look at debt (without the math).
Lenders want to know how much of your monthly income already goes to debt. Typically, the lower your debt burden, the easier it is to qualify — often, at better terms. What helps:
- Paying down high interest balances (even a small payoff can help)
- Avoiding new debt right before you apply
- Adding to savings so your finances look strong on paper
You don’t need to memorize any formulas — just know that less monthly debt generally means more room for a comfortable mortgage payment.
3. Turn your monthly budget into a price range.
Once you set a comfortable monthly payment, use a home affordability calculator link opens in a new window to see what price range that supports (and sanity-check your budget.) It translates your monthly comfort number into a realistic home price range in seconds. The calculator will consider these factors:
- Your down payment
- The loan type and term (e.g., 30 year fixed-rate loan)
- An estimated interest rate
- Taxes, insurance, and HOA dues for homes in your area
Play with a few “what ifs”:
- What happens if you increase your down payment?
- What if you pay off a credit card first?
- How does a different interest rate change your maximum price?
This “payment first” approach helps you shop with confidence — and keeps you from stretching beyond what feels comfortable.
“If you still have questions, you can talk with a lender while you’re researching how much house you can afford,” said Max Vosburgh, senior vice president of mortgage for Commerce Bank. “Even if you find that now is not the right time, it’s an opportunity to learn more about solutions that fit your financial goals.”
4. Don’t forget the “forgotten” (but predictable) costs.
Owning a home comes with regular expenses beyond the mortgage:
- Property taxes and homeowners insurance (often paid through an escrow account)
- Private Mortgage Insurance (PMI) if your down payment is under 20%
- HOA if your community requires them
- Utilities (water, sewer, trash, electric, gas, internet)
- Maintenance and repairs (furnaces, roofs, appliances, seasonal upkeep)
A common rule of thumb is to set aside about 1% of your home’s value per year for maintenance, though older homes or certain climates may require more. If you budget a little each month, big repairs feel a lot more manageable.
5. Get preapproved to make your offer more attractive.
A preapproval is a quick check where a lender reviews your documents (like pay stubs and bank statements) to verify your income, savings and credit. You’ll receive a preapproval letter with the amount you’re qualified to borrow.
You don’t need preapproval to start touring homes — but in competitive markets it’s helpful:
- Preapproval signals you’re a serious buyer
- It helps your offer stand out
- And it focuses your search on homes that truly fit your budget
You can request preapproval online link opens in a new window or by talking with a Commerce mortgage banker.
Quick checklist before you shop:
- I picked a monthly payment I can sustain comfortably
- I added in taxes, insurance, HOA, utilities, and maintenance
- I ran my numbers through a calculator (and tried a few scenarios)
- I reviewed my other debts and paid down what I could
- I gathered documents for preapproval (pay stubs, W-2s, bank statements)
Ready to explore buying a home?
If you’re thinking about purchasing a home this year, take time to understand your full homebuying budget. A Commerce Bank mortgage banker can walk you through your options, answer questions, and help you find the right loan for your situation — at no cost to you.
“Every path to owning a home is unique, and we’re dedicated to making it simple for our customers to finance a new home,” added Vosburgh. “At Commerce, we have down payment assistance programs for eligible borrowers, and we have low down payment programs that help borrowers afford a home.”
Call 844 340 2574 or visit your nearest Commerce Bank branch to get started today. We’re here to make your homebuying journey simple and stress free.
