How Much House Can I Really Afford in Houston?

Maybe you’re looking for a new house in Houston. Maybe you’re just curious about what kind of house you could buy. But if you’re reading this, chances are you’ve wondered, “How much house can I really afford in Houston?”

Purchasing a house can be a significant milestone in people’s lives, representing stability, investment, and personal achievement. But at the end of the day, everybody’s got to have a roof over their head. That’s why, when it comes to buying a house in Houston, it’s essential to strike a balance between your dreams and practical concerns—like money. 

When the rubber hits the road, what is your purchasing power, and what kind of house will it get you in Houston? Figuring that out takes more work than you might think:

1. Calculate Your Budget

Before you embark on your home-buying journey, it’s crucial to have a clear understanding of your financial situation. Start by assessing your income, expenses, savings, and debt obligations. This will help you determine how much you can comfortably allocate towards your monthly mortgage payments. It’s also important because many lenders will want to see PROOF of your income or assets before giving you a home loan.

2. Consider Your Down Payment

Most home purchases in Houston are going to require a home loan. But the down payment is a significant upfront cost. While it is a general rule of thumb to aim for a down payment of 20 percent of the home’s purchase price, that often is not necessary. You can pay as little as three percent down using the Conventional loan to purchase a property in Houston. 

3. Evaluate Your Debt to Income Ratio

Lenders use your debt-to-income (DTI) ratio to assess your ability to manage monthly mortgage payments. It compares your monthly debt obligations (including the new mortgage payment) to your gross monthly income. Ideally, your DTI ratio should be below 43 percent to qualify for a conventional mortgage. However, some loan programs may accept higher ratios.

4. Consider Additional Costs

Beyond the mortgage payment, it’s important to account for additional costs associated with homeownership. Property taxes, homeowner’s insurance, HOA dues, utilities, maintenance, and repairs are ongoing expenses that should be factored into your budget. It’s advisable to set aside funds for these expenses to ensure you can comfortably afford your home in the long run.

5. Get Pre-Approved for a Mortgage

If you’re serious about buying a house in Houston, do this now! Obtaining a pre-approval from a lender will give you a clear picture of the loan amount you qualify for, considering your income, credit score, and financial history. This step will help you narrow down your house-hunting process and avoid disappointment by focusing on homes within your budget. Plus, a pre-approval letter is required with an offer, and you want to be prepared to make an offer on a home you love as quickly as possible.

6. Explore Houston’s Housing Markets

Yes, housing markets, plural! Houston is a huge city with a wide range of housing options to suit various budgets. The city’s diverse neighborhoods cater to different lifestyles and preferences, from downtown lofts to suburban-style single-family homes and everything in between. Research the average home prices in the areas you’re interested in to ensure they align with your budget.

Determining how much house you can truly afford in Houston requires a careful assessment of your financial situation, priorities, and the local housing market. It’s not quite as easy as it sounds! Fortunately, there is expert help available.

By contacting an experienced Houston Realtor®, you’ll get a seasoned tour guide for all the steps you need to grow through to determine your true real-estate purchasing power. Angel Fultz Realty helps people find incredible homes in Houston on a daily basis. We can answer every question you have about buying a home you love!

Contact us now to get started!