Your budget is more than a loan amount. Learn how to figure out how much home you can afford, from taxes to home upkeep.

The lender's number vs your number

When a lender preapproves you, they tell you the largest loan you qualify for. That figure is based on your credit, your income, and your debt-to-income ratio. It is a useful limit, but it is not a goal.

Your own budget should also include the things a lender does not see, such as how much you like to save each month, how often you travel, and what you spend on car payments, groceries, and other regular costs. Many buyers decide to shop below their preapproval amount so that they have breathing room every month.

Add up the full monthly cost

Your monthly housing payment usually has four parts, often called PITI:

• Principal: the part that pays down your loan balance.
• Interest: what the lender charges you to borrow the money.
• Taxes: the property taxes your county, and in some towns your city, charges each year. These are often paid monthly through escrow.
• Insurance: homeowners insurance, plus flood insurance if the home needs it.

On top of PITI, you may also pay:

• Private mortgage insurance if your down payment is under 20 percent on a conventional loan.
• HOA dues if the home is in a community with an association.
• Higher utility bills if the home is larger than where you live now.

Costs that are easy to miss in Southeast Georgia

Every area has its own extra costs. Here, ask about flood insurance for homes near rivers, marshes, and the coast, well and septic upkeep on rural properties, propane for some homes outside town, and air conditioning service after our long summers. You can check whether a property sits in a mapped flood zone with the FEMA Flood Map Service Center. For a full list of what owning really costs, read The True Cost of Owning a Home in Southeast Georgia.

Cash you need up front

Beyond the monthly payment, plan for the cash you need to buy:

1. Down payment. The amount depends on your loan. Some loans allow a small down payment, and some allow none for eligible buyers.
2. Closing costs. These include lender fees, title costs, attorney fees, and prepaid taxes and insurance. Your Loan Estimate lists them.
3. Inspection and appraisal. These are usually paid before closing.
4. Moving costs. Trucks, deposits, and new furniture add up quickly.
5. An emergency cushion. Keep savings for the first surprise repair.

A simple way to test your budget

Here is a habit that many buyers find helpful. Once a lender gives you an estimated monthly payment for a home in your range, practice living on it for a few months. Each month, set aside the difference between that payment and your current rent. If you can save that amount without stress, the payment is probably comfortable. If it feels tight, you may want a lower price range.

You can also check your credit reports for errors before you apply. Visit AnnualCreditReport.com to request them.

Shop with a clear number

Once you know your comfortable budget, your home search gets easier and more focused. Browse homes for sale in 23 counties, or compare condos and townhomes, which may come with lower upkeep. Julie's Home Buying Guide walks through the rest of the process, and her financing page lists lender resources.

Search homes in Southeast Georgia

These searches cover all 23 counties Julie serves and update daily.

Homes (all property types)Condos & TownhomesNew Construction

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Sources

• What is a debt-to-income ratio? (CFPB)
• What is an escrow or impound account? (CFPB)
• What is private mortgage insurance? (CFPB)
• FEMA Flood Map Service Center
• Loan Estimate explainer (CFPB)
• AnnualCreditReport.com