Finding a New Home: Determining What You Can Afford

Over the years my husband and I have lived in homes that were perfectly within our means, while others stretched our pocketbooks a little. Finding the right balance to what you can afford depends on more than just your income or how much your downpayment is. Here's a few things to keep in mind:

The highest most real estate agents suggest that your rent or mortgage consumes of your gross income is 36%. For some that may sound high, while for others that might seem low — it really depends on where you sit financially and the places available in your neck of the woods.

Many landlords verify that you make at least 3 times the monthly rent (and even run credit checks to verify that you don't have any loans waiting to suck your cash out of their hands). Others aren't as strict on the issue — leaving those with less income a little wiggle room.

Although money and income have been a concern when house and apartment hunting, there are other things to consider. When looking into the amenities of the area, things like grocery stores (and their prices), proximity to a laundromat, mass transit and retail shopping are all things to take into account.

From personal experience, just because you make 3 times the amount in rent, that happy home hunting parachute can quickly be shot down if your groceries are 3 times the price as other stores. Although it sounds small, tripling your budget for certain items (or gas to drive places) can really add up quick. Other things to be on the lookout for are necessary immediate repairs, landscaping (equipment or services), community fees, parking or Home Owner dues.

Finding yourself in a situation where you're paying more than you can afford comfortably isn't fun for anyone, no matter how great the space is (trust us, we've been wooed by accommodations and walk in closets before!). Even if you think you can tough it out and tighten your belt a little, the stress that comes from such an environment is off the charts.

What other things add up when looking at apartments or new homes? Did you once find the perfect place and try to swing the higher price, or are you ok with settling for something that is truly within your means to afford yourself the little luxuries life has to offer? Let us know below!

Image: Flickr member Cliff1066 licensed for use by Creative Commons

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Sarah Trover has lived all across the Midwest and currently calls the hot dog-laden city of Chicago home. She rides scooters and seeks out kitchens that make the best pie.

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