When it comes to buying a home, one of the first and most important steps is setting a realistic budget. But how do you know if you’re financially ready to make such a big purchase? Here’s a simple guide to help you get started.

Step 1: Speak with a Lender

The first thing I always recommend is speaking with a lender. A lender can provide you with your maximum qualification amount, giving you a clear picture of where you stand financially. This is crucial because you can’t make informed decisions about your budget without knowing where you are right now.

While it might take some time to submit documents and get approved, this is the foundation for planning your home purchase. Without this step, it’s hard to figure out what you can truly afford.

Step 2: Determine Your Comfortable Monthly Payment

While your lender will tell you the maximum amount you qualify for, many people aren’t comfortable with that number, especially when they see the monthly payments associated with it. It’s important to consider what you’re actually comfortable paying each month, factoring in your lifestyle and other financial obligations.

I recommend that you come up with a figure in your mind that feels manageable, and then share that amount with your lender. They’ll be able to give you a sales price based on that number, and you’ll also get an estimated monthly payment that includes taxes and insurance. Unlike most online calculators, this step ensures you’re factoring in all the expenses involved in buying a home.

Step 3: Understand Your Real Budget

Once you’ve spoken with your lender and gotten an accurate monthly payment estimate, you’ll have a much clearer picture of your real budget. This is crucial because it’s easy to get excited about a home that’s priced higher than your budget, only to realize that it’s a stretch when you factor in your actual monthly payments. Knowing your real budget helps you avoid the disappointment of falling in love with a home that’s out of your reach.

Step 4: Are You Ready to Buy?

With this information, you now know what you’re qualified for and what you’re comfortable paying. This helps you decide whether you’re ready to buy right now or if you need more time to save. If you’re not quite ready, don’t worry! You now have a clear plan to help you get there.

Final Thoughts

Setting your budget is the first step in buying a home, but it’s also one of the most important. If you have questions about how to get started, I’m always happy to chat—no pressure! And if you’re outside of Virginia, I can connect you with a trusted lender in your area.