Buying a new home is one of the largest purchases we make in our lifetimes. Since it’s such a huge financial decision, it’s best to do your due diligence to determine how much you can afford before going to your first open house.
Reviewing and adjusting your finances is an important first step towards homeownership. Here are some great tips on how to budget for a new home.
Review your income
The key to creating a budget is knowing how much you have to spend. Add up your after-tax income sources for the month. Use this final number to build your budget around.
Write down current monthly expenses
List all of your monthly expenses so you can see where your dollars go each month, including any debt payments. Once you have your expenses figured out, you can calculate how much you’ll have remaining for housing costs.
List new regular expenses
In addition to your usual household expenses like mortgage and utilities, you’ll be responsible for some additional costs as a homeowner that you weren’t previously.
- Property taxes and homeowner’s insurance: Check to see if these payments are included in your monthly mortgage payment. If you need to make separate payments, you’ll want to include that into your budget so you’re not surprised when the bill arrives. If they are included with your mortgage payment, be aware that your payment amount may vary by the year due to changes in property taxes and insurance premiums.
- Homeowners association fees: Homeowners association (HOAs) dues are fees collected to maintain common areas in a neighborhood. Some fees are collected monthly while others are collected yearly. Its best to set some money aside each month so you’re not blindsided by a large payment all at once. Thankfully, Hayden Homes’ communities don’t have homeowners association fees.
- Home maintenance: If you’re purchasing an existing (or used) home, home maintenance should be top of mind. A good rule of thumb is setting aside 1 to 2% of the value of your home each year for upkeep. One of the benefits of buying a brand new home is not having to worry about typical home maintenance. We offer each Hayden homebuyer one of the most comprehensive homeowner warranty programs. Each Hayden home comes with a one-year builder warranty on our work so the first year in your new home will be worry free!
Once you have your expenses written down, review them to see if there are any areas you adjust your spending so you can save money or increase your allowable housing costs and/or paying down debt.
Save for a down payment
Many first-time homebuyers find saving for a down payment is typically the biggest challenge to overcome. Find out how much of a down payment you’ll need by getting pre-qualified for a mortgage and then create a savings plan.
Roll with the financial punches
Budgets are living breathing things so it’s okay to revisit your budget and make adjustments as your financial situation changes. Make sure you’re still building an emergency fund (ideally, you’ll have enough set aside to cover three to six months of expenses).
Find your dream home with Hayden Homes
If you have more questions on how to budget for a new home, our team is here to help and are available to get you in touch with a loan officer to go deeper into this topic with you. So when you’re ready to start the homebuying process, we’re ready to help you find your dream home. We have brand new homes for sale in Idaho, Oregon, and Washington. Contact us today to learn how we can help you find your new home.