How much can I spend on a house?

Only spend what you are comfortable spending. There is nothing worse than being house poor and adding more stress every month. Keith Jean-Pierre Managing Principal The Dapper Agents Operations In: NY, NJ, FL & CA

Pre-approval is just the max the bank will lend—it doesn’t mean you should spend it. A good way to find your number is to look at what you’re comfortable paying now and then add in things like taxes, insurance, and maintenance. For example, in towns like Westwood and Norfolk, property taxes can easily add $600–$800 a month depending on the home, and that’s on top of the mortgage. Many of my clients choose well under their approval so they can enjoy their home without feeling “house poor.”

You need to contact a mortgage lender to answer these questions. They will ask you questions about your financial situation, employment, credit and income. Afterward -- you will have a better idea if and what you can afford. There is not fee for this service. If you do not want to talk to a person -- I would imagine there are some websites to help with determining preapproval amount and online lenders as a starting point. At some point you will need to make that phone call.

When a lender gives you a pre-approval, it’s usually for the maximum you can qualify for on paper, not necessarily what you’ll be comfortable paying each month. A better approach is to work backwards from your budget: First, Aim to keep your monthly housing costs (mortgage, taxes, insurance, HOA if any) around 25–28% of your gross monthly income. Second, Factor in property taxes, homeowners insurance, and maintenance, not just the mortgage. Third, With 20% down, you’ll be in a strong position, but choose a price that leaves room for savings, retirement, and lifestyle goals. Bottom line: Don’t shop at the top of your pre-approval. Shop at the number where your monthly payment feels manageable and still allows you to live the life you want.

Getting pre-approved doesn’t mean you should spend the full amount. Lenders calculate what you can afford, not what’s comfortable. To figure out what you can really spend, start with your monthly budget and decide what payment feels manageable — including taxes, insurance, and maintenance. Aim to keep housing costs under 30% of your gross income, even if you’re putting 20% down. Use a mortgage calculator or ask your lender to match a purchase price to your ideal monthly payment. The key is: Buy based on your lifestyle, not the bank’s limit. Would you like help estimating what price point matches your ideal monthly payment?

The Massachusetts Homebuying Circus Home prices: The state's average price is $658,400—just enough to make you wonder if you can Airbnb your garage to pay the mortgage. Median sale price: $686,700... because apparently, everyone is trying to move here for the lobster rolls or Dunkin’ Donuts proximity. Boston: Average price is $739,121, but median listing is $895,000. For that, you get premium access to potholes, Red Sox traffic, and aggressive squirrels. Worcester: $443,717—affordable (relatively), and you might even find a house that comes with working pipes and a mysterious stain in the basement. Market Mayhem Houses sell in under 40 days, which is less time than it takes to binge-watch “The Office” and have a mild existential crisis. Over 40% of homes go for above list price—bidding wars here are the adult version of musical chairs, but with more paperwork and tears. Buyer Survival Tips Plan to spend $450,000–$900,000. If you want to live near Boston, add a few extra zeroes or get really comfortable with roommates who collect Fabergé eggs. Property taxes, closing fees, and repairs: Because nothing says “welcome home” in Massachusetts like a surprise tax bill bigger than your wedding. Bottom line: In Massachusetts, houses cost a lot, but the stories you'll get from house hunting and negotiating will make you laugh, cry, and maybe reconsider van life

Your instinct is right — lenders approve the maximum they'll risk, not what's comfortable for you. Use the 28% Rule: Your monthly housing payment (mortgage + taxes + insurance) should be no more than 28% of your gross monthly income. Also check that all your debts combined stay under 36% of gross income. Use whichever gives the lower number — that's the right number to shop with. Also make sure you still have 3–6 months of emergency savings after the down payment, and budget 1–2% of the home's value annually for maintenance.

The amount you are pre-approved for and the amount you should comfortably spend are often two very different numbers. A lender is telling you the maximum loan they may be willing to offer based on debt-to-income ratios, but that does not always reflect what feels manageable in your real monthly budget. The best way to figure out what you can really afford is to start with the monthly payment you are comfortable with, not the purchase price. Begin by looking at your current monthly income, fixed expenses, savings goals, and how much room you want left over each month for everyday life and unexpected costs. Then work backward into a home price. Also, make sure you are budgeting for the full monthly cost of ownership, not just principal, interest, and taxes. Buyers also need to account for homeowners insurance, (which has been rising rapidly in many markets), utilities, maintenance, and any HOA or condo fees. Insurance and taxes alone now make up a much larger share of monthly payments than many buyers expect. On top of that, I always advise buyers to budget separately for ongoing maintenance and repairs. A common rule of thumb is 1%–3% of the home’s value per year for upkeep, and older homes can easily run higher. Roofs, heating systems, appliances, tree work, and exterior maintenance add up quickly. I wrote a more detailed guide on this exact topic here: Hidden Costs of Homeownership Guide: https://dougmcneilly.com/2024/05/29/hidden-costs-of-homeownership-guide The right number is the one that lets you comfortably make the payment and still sleep well at night. In many cases, that means buying below the pre-approval amount, and that is often the smarter move.

The best way to know is to talk to a local lender to help you determine the best purchase price for your budget, Since this is based on a number of factors, they are best equipped to assist you with this.

When determining how much you can truly afford for a home, look beyond your pre-approval amount and focus on your monthly budget. Financial experts recommend that your monthly mortgage payment should not exceed 25-30% of your take-home pay, which includes principal, interest, property taxes, and homeowners insurance. Consider your other monthly expenses like utilities, car payments, groceries, and savings goals to ensure you're comfortable with the potential mortgage payment. The best first step is to contact a lender or mortgage broker to discuss your specific financial situation, as they can provide personalized guidance tailored to your unique circumstances and help you make the most informed decision. I hope this information is helpful in your home-buying journey!

That’s a really smart question and one I hear often from homebuyers across the Boston suburbs. Getting pre-approved is a great first step, but lenders usually approve you for the maximum amount you qualify for on paper, not necessarily what’s comfortable for your lifestyle. To figure out how much you can really afford, start by looking at your monthly budget, not just the loan amount. Consider what you want left over after paying your mortgage, property taxes, insurance, and utilities: things like savings, travel, or kids’ activities. Many of our clients in Sharon, Canton, and Milton, MA choose to buy well below their pre-approval so they can live comfortably and still enjoy their home. I always recommend working with both your Realtor and lender to run different “what-if” scenarios for example, what would your payment look like if you spent $50,000 less? Understanding that range helps you buy with confidence and peace of mind.