HE How much home

How Much Can You Afford to Spend on a New Home?

Buying a new home marks one of the biggest financial decisions you will ever make. While the process can feel exciting, it also requires a clear understanding of your financial situation. Many buyers begin house hunting without a solid grasp of how much they can truly afford. If you want to make a smart investment and avoid future stress, you need to start with the right number.

Here’s how to figure out how much home you can comfortably afford.

Understand Your Budget

Start by reviewing your monthly income, expenses, and debts. Calculate how much you currently spend on housing, transportation, food, insurance, and entertainment. Then examine your debts, including credit cards, student loans, car loans, and any other monthly obligations. Subtract all of your monthly expenses from your income to see how much room you have for a mortgage.

Lenders will look at this same information. They want to see that you can handle a mortgage payment without stretching your budget too thin.

Follow the 28/36 Rule

Many financial experts recommend following the 28/36 rule to stay on safe financial ground. According to this rule:

  • Spend no more than 28 percent of your gross monthly income on housing costs, including your mortgage, property taxes, insurance, and HOA fees.
  • Keep your total debt payments, including your mortgage and all other debts, below 36 percent of your gross monthly income.

For example, if you earn $100,000 per year, or about $8,300 per month before taxes, your housing costs should stay below $2,300 per month. Your total monthly debts should remain under $3,000.

Consider the Down Payment

The size of your down payment plays a big role in how much house you can afford. A larger down payment reduces your loan amount and lowers your monthly payments. It also helps you avoid private mortgage insurance (PMI), which adds to your cost if you put down less than 20 percent.

If you plan to buy a $400,000 home, a 20 percent down payment would equal $80,000. If that amount feels out of reach, you may want to consider more affordable homes or delay your purchase to save more.

Include All Housing Costs

Many buyers focus only on the mortgage payment, but your monthly housing costs include much more. Property taxes, homeowner’s insurance, utilities, repairs, and maintenance can add hundreds of dollars to your monthly expenses.

Use a mortgage calculator that includes taxes and insurance to get a more accurate estimate. Then factor in estimates for monthly utilities and long-term repairs. A home inspection can help you anticipate those future costs.

Plan for the Unexpected

Life rarely goes exactly as planned. You may face job changes, medical bills, or home repairs that strain your budget. Before you buy, make sure you have an emergency fund with at least three to six months of expenses. This cushion gives you peace of mind and keeps you out of financial trouble if surprises arise.

Final Thoughts

Your dream home should bring joy, not financial anxiety. When you take time to understand your budget, plan for all expenses, and stay within safe borrowing limits, you set yourself up for long-term success. Buying less house than you can afford might not feel exciting today, but it will give you freedom, flexibility, and stability in the years ahead.

If you need help running the numbers, consider speaking with a financial advisor who can help you create a plan that fits your goals and supports your financial health.
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MILLS WEALTH ADVISORS

Your Fiduciary Financial Advisor in Southlake, TX

Stop by our Southlake wealth-management office, just off TX-114 and minutes from Westlake, Trophy Club, and Colleyville, to meet the team that’s guided North Texas families and business owners for 25 years. Mills Wealth Advisors delivers fee-only financial planning, retirement-income strategies, tax-efficient investing, and exit-planning expertise to clients across the Dallas-Fort Worth metroplex. Tap the map below for turn-by-turn directions or give us a call to book your complimentary discovery meeting today.

  1. Leave Westlake
    • Head south (≈ 350 ft, restricted-use road).
    • Turn left toward Trophy Club Dr / Westlake Pkwy (≈ 440 ft, restricted).
    • Turn left onto Trophy Club Dr / Westlake Pkwy (0.1 mi).
  2. Join TX-114 East
    • Turn right onto TX-114 Frontage Rd (0.4 mi).
    • Use the left lane to merge onto TX-114 E (1.4 mi).
  3. Exit for Dove Rd / White Chapel Blvd
    • Take the Dove Rd exit (0.5 mi) and keep right.
    • Continue on W State Hwy 114 (0.9 mi).
  4. North White Chapel Boulevard
    • Turn right onto N White Chapel Blvd (0.3 mi).
    • At the first traffic circle, take the 2nd exit to stay on N White Chapel Blvd (2.2 mi).
    • At the next traffic circle, take the 3rd exit (≈ 460 ft).
  5. Arrive
    • Turn right; Mills Wealth Advisors will be on the left after ≈ 130 ft.
    • Address: 1207 S White Chapel Blvd #150, Southlake, TX 76092.
  1. Leave Trophy Club
    • From Hamper Ct, head southwest to Hogans Dr (≈ 350 ft, restricted).
    • Turn right onto Hogans Dr (0.2 mi).
    • Turn right onto Indian Creek Dr (≈ 400 ft).
    • Turn left onto Trophy Club Dr and continue toward TX-114 (0.4 mi).
  2. Join TX-114 East
    • Turn left onto TX-114 Frontage Rd (0.4 mi).
    • Use the left lane to merge onto TX-114 E (1.4 mi).
  3. Exit for Dove Rd / White Chapel Blvd
    • Take the Dove Rd exit (0.5 mi) and keep right.
    • Continue onto W State Hwy 114 (0.9 mi).
  4. North White Chapel Boulevard
    • Turn right onto N White Chapel Blvd (0.3 mi).
    • At the first traffic circle, take the 2nd exit to stay on N White Chapel Blvd (2.2 mi).
    • At the next traffic circle, take the 3rd exit (≈ 460 ft).
  5. Arrive
    • Turn right; Mills Wealth Advisors is on the left after ≈ 130 ft.
    • Address: 1207 S White Chapel Blvd #150, Southlake, TX 76092.
  1. Depart Colleyville
    • Head northwest (≈ 85 ft) to Colleyville Blvd.
    • Turn right onto Colleyville Blvd (0.2 mi).
  2. Pleasant Run Road
    • Turn left onto Pleasant Run Rd (2.0 mi).
    • At the traffic circle, continue straight to stay on Pleasant Run Rd (0.6 mi).
  3. South White Chapel Boulevard
    • Pleasant Run Rd becomes S White Chapel Blvd—continue for 0.5 mi.
    • At the next traffic circle, take the 1st exit (≈ 312 ft).
  4. Arrive
    • Turn right; Mills Wealth Advisors is on the left after ≈ 131 ft.
    • Address: 1207 S White Chapel Blvd #150, Southlake, TX 76092.
  1. Keller Parkway (FM 1709)
    • Head east on Keller Pkwy toward Rufe Snow Dr.
    • Pass Scooter’s Coffee on the right. Distance: 1.5 mi.
  2. Southlake Boulevard
    • Continue straight; Keller Pkwy becomes W Southlake Blvd. Distance: 1.0 mi.
  3. Davis Boulevard (FM 1938)
    • Turn right toward Davis Blvd / S Randol Mill Ave (112 ft).
    • Turn right onto Davis Blvd and continue 0.7 mi.
  4. W Continental Boulevard
    • Turn left onto W Continental Blvd. Distance: 1.7 mi.
    • At the traffic circle, take the 2nd exit to stay on W Continental Blvd (≈ 370 ft).
  5. Arrival on S White Chapel Boulevard
    • Turn right, then the destination will be on the left after ≈ 130 ft.
    • Mills Wealth Advisors – 1207 S White Chapel Blvd #150, Southlake, TX 76092.

1207 S. White Chapel Blvd.
Suite 150
Southlake, TX 76092

For more than twenty-five years, we’ve been serving the financial needs of businesses, individuals, and families in Southlake, Texas and around the country.
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