REGION – If buying a home feels out of reach right now, you may want to take a closer look before counting yourself out.
Housing affordability is a real concern. Home prices, mortgage rates, and everyday expenses all play a role in what buyers can comfortably afford. But the price you see on a listing is only one part of the equation. A better place to start is with a simple question: What monthly housing payment feels comfortable for my budget?
Once you have that number, you can work backward to understand what home price and financing options may fit.
Start with your comfort zone
Before scrolling through listings, take a look at your monthly income, expenses, and financial priorities. Think about a payment that would allow you to comfortably cover your mortgage while still leaving room for savings, emergencies, and the things you enjoy. Then try PrimeLending’s Home Affordability Calculator at lo.primelending.com/vblodgett/calculators/how-much-home-can-i-afford. Plug in a few numbers and explore different scenarios to get a general idea of what your buying power could look like. You may discover more possibilities than you expected.
Look beyond the 20% down payment
One of the biggest misconceptions about buying a home is that you need to put 20% down. You may not.
Depending on your situation, conventional, FHA, VA, and USDA loans may offer lower down payment options. Some qualified buyers may also be eligible for down payment or closing cost assistance programs, including programs designed specifically for first-time homebuyers. The important thing is to understand which options are available to you, rather than assuming you need to reach a certain savings goal before you can even start looking.
Explore ways to make the numbers work
Your loan isn’t the only factor that can affect affordability. The structure of the home purchase itself can sometimes create opportunities. For example, a seller may be willing to contribute toward certain closing costs. A temporary rate buydown could reduce your initial monthly mortgage payments. And, depending on your priorities, expanding your search to a different neighborhood, condo, townhome, or slightly smaller home could bring more choices into your price range.
PrimeLending has extended its Birthday 1-0 Buydown through Oct. 20. On eligible FHA and USDA loans, PrimeLending foots the bill to buy down your effective interest rate by 1% for the first year, giving you a lower initial monthly payment and a little more breathing room as you settle into your new home.
You can also look at the home itself. Expanding your search to a different neighborhood, condo, townhome, or slightly smaller home could bring more choices into your price range. Even small adjustments can change the picture
Replace assumptions with real numbers
Perhaps the most important step is getting qualified early.
It’s easy to make assumptions about what you can or can’t afford based on headlines, online estimates, or what a friend paid for a home. Qualification gives you an estimate based on your own financial situation. And getting qualified doesn’t mean you have to start house hunting tomorrow.
If buying is six months or even a year away, understanding where you stand today can help you create a plan. You may learn that you’re ready sooner than expected, or you may identify a few things to work on first. Either way, you’ll have something much more valuable than a guess.
Not sure what you can afford? Let’s find out. Start with the affordability calculator, then set up a quick conversation with me. It costs nothing, and there’s no obligation to move forward. We can look at your budget, run personalized scenarios, and talk through the options that may fit. You may be closer to homeownership than you think.
Submitted by Victoria Blodgett, PrimeLending, Ludlow, Vt.