How much house can you afford?

Don’t base what you can afford on how much income you think you’ll have in the future.  Base it on what your family’s income is right now and leave room for budgeting in life’s unexpected expenses.

Short-Term Costs:

Down Payments – 0-20% of sale price

0 down for USDA Rural Development Loans and VA Loans

3% minimum of the sale price for conventional loans.

3.5% of the sale price for FHA

*Generally the more you put down, the lower your rate will be. Please confirm with your   lender.

Appraiser Fee – estimated $400-$600

Home Inspection – averaged at $400

Termite Inspection – averaged at $50

Closing Costs – Averaged at 3% of sale price.

  • Loan origination fee –  1% of loan
  • Title Insurance – up to $400
  • Credit Reports – $10-$20

Moving Fees – The American Moving and Storage Association states that the average cost of an interstate household move is about $4,300 (distance of 1,225 miles) and the average cost of an intrastate move is about $2,300 (4 movers at $200 per hour).

Long-Term Costs:

Property Real Estate Taxes – Counties in Tennessee collect an average of 0.68% of a property’s assessed fair market value as property tax per year.

Private Mortgage Insurance – If you put down less than 20% of your loan, you may be required to pay .5-1% of of your loan as insurance to protect mortgage company.

Homeowners Insurance – The Tennessee average is roughly $700/yearly based on the state’s home median house valuing at $140,000.

HOA Fees – Be sure to review your Homeowners Association restrictions.  This could end up costing you more than just an HOA fee.  Example: If they don’t allow storing of boats/trailers on your property, this could cost you a slip or storage fee you may not have had before.

Monthly Bills and Utilities – Add up your current bills on credit cards, student loans, insurances, childcare, cable/internet, phone etc. Then, add up averages on expenses like gas, groceries, travel, and eating out.  Ask your agent for monthly averages of utilities for the home you are considering (include HOA).  Adding these with a mortgage calculator and estimated taxes will give you a better idea of what to expect.  One widely used Rule of Thumb states that your mortgage should not exceed 28% of your gross income.  Don’t leave yourself “house poor”.

Mortgage Calculator – Click Here.

Budget for Maintenance – Old HVACs, water heaters and roofs can be a sneaky expense.  Home inspections can help determine near future costs.