Study what budget you have to buy a house and discover what housing you can afford depending on your savings or what you earn.
If you are already clear about what you want to buy a house, you have defined what type of home you need and it is your turn to start looking, before that, you must make and establish a budget to see if the houses that cross your path are viable and maybe within your reach.
There is no use searching for seeking. You have already had time to be clear and choose the ideal house and now it is your turn to stipulate some scales so that the purchase is a success and you can carry it out.
For this reason, in today’s article, we are going to teach you 5 steps to know what budget you have to buy a house, learn to calculate the money you need, and end up acquiring a home that is related to your economic situation and lifestyle.
Calculate what budget you have to buy a house and ensure good financial health.
Are you ready to do numbers? Take a paper and a pen, a calculator and pay attention to the explanations below.
How can I calculate my budget to buy a home?
1 – Account for what savings you have
The first thing you should do is go to your bank or take it out of the house where you have your money saved and count everything there is.
Having savings is essential to buy a house because today there are very few banks that grant 100% of mortgages. With the 2008 crisis and the real estate bubble they wanted to be more cautious and now, the most common is that they give 80% of the value of the house.
In this way, when you go to the bank to request a mortgage loan to face the house payment, you must have that 20% in savings mode.
Having savings is essential to be able to buy an apartment.
If you do not have these savings, you can ask for money from whoever you consider, but I advise you that if you do not have enough financial solvency to have that money, you better not ask for it and wait to save a little more.
When you go to buy a house you have to be very realistic with what you have and it is useless not having money but getting it borrowed, because then, in the long run, the one who will continue to have financial problems is going to be you.
So, try to collect that 20% of the property (only for the entrance), save a little more and the time will come. Because as you will see below, it will not only be that money that you need to set up and manage your budget.
2 – Calculate your annual income
Everyone knows what they charge and what their annual income is, and although many times they like to push up, when you go to buy a flat you cannot round up.
With which, to know how much you can pay for your house and what part of your income should be used for the mortgage payment, you must:
- Identify your income (fixed and variable)
- Write down all your basic and personal monthly expenses
- See if there is a percentage left
When you have determined each of these three parts, and you go breaking down your salary into fixed monthly expenses, personal, and money for leisure, going out to dinner or any type of unforeseen event, think if at the end of the month you can cut a little from somewhere and use it to pay the mortgage payment.
You have to take into account the fee you will pay to include it in the breakdown of expenses. And subtract the rental fee that you are paying now, to add the new fee.
It always tends to put more than what you will pay as a fee because you never know what could happen and better than on money that is not missing.