Understanding True Home Affordability
Beyond the Mortgage Payment
Many first-time homebuyers focus solely on the mortgage payment, but true affordability includes all monthly housing costs. This calculator helps you understand the complete picture by factoring in property taxes, insurance, maintenance, and HOA fees.
The 1-2% Maintenance Rule
Financial experts recommend budgeting 1-2% of your home's value annually for maintenance and repairs. This covers:
- HVAC servicing and eventual replacement ($5,000-$10,000)
- Roof repairs and replacement ($8,000-$20,000 every 20-25 years)
- Plumbing and electrical repairs
- Exterior painting ($3,000-$7,000 every 5-10 years)
- Appliance replacements
- Landscaping and yard maintenance
- Pest control and preventive maintenance
Neighborhood-Specific Costs
Location significantly impacts maintenance costs:
- Coastal areas (1.3x): Salt air causes faster deterioration of materials, storm damage is more common, and specialized materials are needed
- Historic districts (1.4x): Preservation requirements, specialized contractors, and approval processes increase costs
- Urban areas (1.2x): Higher labor costs and limited contractor availability
- HOA communities (0.8x): Lower personal maintenance as HOA fees often cover exterior maintenance, landscaping, and common area upkeep
The 28/36 Affordability Rule
Lenders typically use the 28/36 rule to determine affordability. Your total housing costs (PITI + HOA) should not exceed 28% of gross monthly income, and all debt payments should not exceed 36%. This calculator shows the annual income you'd need to comfortably afford your target home.
Property Taxes Vary Widely
Property tax rates range from 0.3% to over 2% depending on your location. Research your local county's exact rate, as this can significantly impact affordability. Some states have no income tax but higher property taxes, while others have the opposite.
Don't Forget Homeowners Insurance
Insurance costs vary based on location, home value, coverage level, and risk factors. Coastal areas, flood zones, and regions prone to natural disasters will have significantly higher premiums. Get quotes from multiple providers before finalizing your budget.