How Much House Can You Really Afford?

For first-time homebuyers, one of the biggest questions on their mind is, "How much house can I really afford?" The answer to this question isn't easy. There are so many factors that come into this decision that it can take some time to come to a figure that you're comfortable with. In fact, if you don't have some type of list to consider, arriving at a figure can even be overwhelming and you could make a bad decision. Here is a checklist that you can use to determine how much of a monthly mortgage payment you can afford while still being able to buy food and pay other bills in the process.

Evaluate your job situation.

Your job plays a major role in how much of a mortgage payment you can afford. If you have been at your job for years and it seems secure, you don't have the worry of being laid-off or fired looming over your head. With an insecure job, however, you could lose it at any time and then you'd be stuck with a mortgage payment and no income. Be aware of your job security before taking on a mortgage that you're not comfortable with.

Consider the type of mortgage you want.

There are several different types of mortgages out there, especially for first-time homebuyers. With an Adjustable Rate Mortgage (ARM), your payments could increase or decrease each month depending on the current interest rates. There are also HUD mortgages, VA mortgages and traditional mortgages, just to name a few. The monthly payments you can afford will depend on the type of mortgage you sign up for, so take this into consideration when getting the home loan.

Your income is the huge consideration. The amount of house you can afford will depend directly on your income. Specifically, your net income (take-home pay) is the main consideration because that's the money you have access to on a regular basis.