Buying a home is exciting — and overwhelming. It’s also one of the biggest money decisions most people will ever make. And one of the first questions homebuyers ask is obvious, but hard to answer: How much house can I afford?
The tricky part is that online calculators and mortgage pre-approvals usually tell you what you could spend, when what you really need to know is what you should spend. Those two numbers are often very different — and understanding that difference matters before you make an offer.
Why a Mortgage Pre-Approval Isn’t What You Can Afford
A mortgage pre-approval shows how much a lender is willing to lend you — not how much house you can afford.
Lenders consider income, existing debt, and credit history to determine how large a loan they are willing to give. What they don’t look at is your day-to-day spending — groceries, childcare, travel, savings goals, or how much flexibility you want to keep in your accounts each month. Pre-approvals also don’t account for job loss or income changes, rising utility or maintenance costs, or lifestyle choices like travel, hobbies, or helping family.
A helpful way to think about affordability is whether you could afford the payment during a “bad” year — not just a good one.
š” Tip: Treat the amount on your pre-approval letter as a ceiling, not a target.
What Does “House Poor” Mean (and How Do You Avoid It)?
Being “house poor” means a large portion of your income goes toward housing costs — not just the mortgage, but also taxes, insurance, utilities, and upkeep — leaving very little left over. You may own a home, but day-to-day, cash is tight.
A common rule of thumb is to try to keep total housing costs at about 30% of your income, but even that can vary depending on your individual situation and expenses.
So, how do you avoid becoming “house poor”?
You need to look beyond the purchase price and think about the big picture. That means being realistic about your monthly budget, accounting for all the costs that come with owning a home, and choosing a house that leaves room for savings, emergencies, and long-term goals like retirement.
š Read our blog post – Wealth vs. Liquidity: Why Having Assets Doesn’t Always Mean Having Access
What Home Costs Should You Plan for Besides the Mortgage Payment?
In the excitement of purchasing a new home, it is easy to focus on just the monthly mortgage payment. But that is only part of the cost of owning a home. There are many other ongoing and one-time expenses that can add up quickly, including:
- Property taxes
- Homeowners (and possibly flood, wind, etc.) insurance
- Utilities (electric, heat, water, sewer, trash, internet)
- Maintenance and repairs (routine upkeep and fixes)
- Major replacements (roof, HVAC, appliances)
- HOA or condo fees, if applicable
- Lawn care, snow removal, or pest control
- Home improvements and updates
- Moving, closing, and setup costs
- Tools and equipment
Thinking about these costs ahead of time can help keep your overall house-hunting budget realistic.
š” Tip: Before you buy, add a monthly “home buffer” for repairs and upkeep to your budget. If the payment no longer feels manageable, it may be worth reconsidering your price range.
š Our Financial Planning process helps families think through big decisions like buying a home alongside saving, investing, and planning for what’s next.
How Do You Know How Much House You Can Afford Before You Buy?
Instead of relying on online calculators or rules of thumb, one of the most helpful things you can do is “test-drive” a mortgage payment to see how it fits into your real life — before you’re locked into it.
One way to do that is to temporarily set aside the amount your potential mortgage would cost each month and live with that change for a while. Not on paper. In your actual checking account.
As you do, ask yourself:
- Are you still able to spend and save the way you want to?
- What would happen if your income changed, you incurred additional expenses, or your priorities shifted?
You may find that the payment technically works — but only if nothing changes. That insight is valuable. It can help you decide whether the price range you’re considering is realistic.
A short test-drive won’t give you a perfect answer, but it often tells you far more than a calculator ever could.
š Read our blog post – What to Know Before Buying a Home on Your Own
Buying a Home in Connecticut: What Should You Think About First?
In Connecticut, where you buy can matter just as much as the home's listing price. Costs like property taxes, utilities, and services can vary widely by town. Some expenses are bundled into local taxes, while others are paid separately, which can add to your monthly budget.
Home age also matters. Many homes in Connecticut are older, and New England’s mix of cold winters and hot summers can make heating, cooling, and ongoing upkeep a significant part of the budget. These aren’t necessarily dealbreakers — but they’re important to factor into your decision.
So, How Much House Can You Really Afford?
The right answer is not the highest number a bank or calculator gives you. The house that you can afford is the one that lets you enjoy your new home while allowing room for life to happen.
If you’d like to talk about how a home purchase fits alongside saving, investing, and retirement goals, we’re here to help. Schedule a complimentary introductory meeting with our team in Glastonbury or Wilton, Connecticut, to go over your options.
Michael Nicoletti is a CERTIFIED FINANCIAL PLANNER® professional and works with clients throughout Connecticut and nationwide, offering financial planning and wealth management services. Based in Glastonbury and Wilton, CT, Michael helps families and individuals plan for their financial, insurance, investment, and retirement goals. Schedule a complimentary introductory meeting with Michael.