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Where to Start When Budgeting for a New Home

The first step when planning to buy a home is to think about what your budget looks like. Having a budget will allow you to look for a property within your means and not overextend your finances. When budgeting, remember the 28% rule, which states that your housing budget shouldn’t exceed 28% of your finances to keep them healthy.

Save for a Downpayment

Your down payment is one of the first things you need to consider when budgeting. It’s usually suggested that you save at least 20% of the total cost of your property as a down payment. This will allow you to lessen your mortgage costs and make it easier to make your monthly payments without straining your finances.

Closing Costs

A lot of times, home buyers will overlook closing costs when budgeting for a new home. These costs are usually covered by both the buyer and seller and might be up to 5% of the purchase price. When discussing the final deal, it’s important to discuss who will cover which closing costs to ensure it's fair for all parties involved.

Other Expenses

Lastly, considering moving, repair, and renovation expenses is essential. These costs can sometimes catch new homeowners by surprise. Having a rainy day budget or an emergency house expense fund, especially when moving into a new home, can prevent you from dipping into your savings to cover these expenses.