I want to buy a home
Buying a home is a big money choice. This page walks you through it one step at a time, in the right order. It takes about 15 minutes.
- 1
Find out how much home you can afford
Start here so you do not fall in love with a house that is out of reach. Type your yearly income, your monthly debts and how much cash you have saved.
How much house can I afford?
Check what I can afford →Tip: Just because a lender says yes to a big loan does not mean the payment will feel easy. Leave room for life.
- 2
Check how much of your pay already goes to debts
Lenders look at your debt-to-income ratio. That is the share of your monthly pay that goes to debt payments. Type your income and what you pay each month.
How much of my income goes to paying debts?
Check my debt ratio →Tip: Paying off a small loan or card before you apply can lower your ratio and help you get a better rate.
- 3
Plan your down payment
The down payment is the cash you pay up front. Type the home price and the percent you want to put down to see how much to save and how long it will take.
How much do I need to save to buy a home?
Plan my down payment →Tip: Putting down less than 20% often means paying extra mortgage insurance each month. Ask your lender how much.
- 4
See your monthly mortgage payment
A mortgage is the loan you use to buy the home. Type the price, down payment, interest rate and years to see your monthly payment, with tax and insurance.
How much will my house loan cost each month?
Work out my payment →Tip: Even a small change in the interest rate can change your payment a lot. Try a few rates to see the range.
- 5
See where every payment goes
An amortization table shows how much of each payment pays interest and how much pays down the loan. Type the same loan details as before.
How does each payment pay down what I owe?
Show my payment table →Tip: In the early years most of your payment is interest. Extra payments then can save the most money.
- 6
Ask: is buying better than renting for me?
Buying is not always the cheaper choice. Type your rent, the home price and how long you plan to stay to compare the two.
Is it better to rent or buy a home?
Compare rent and buy →Tip: If you might move within a few years, the costs of buying and selling can be bigger than what you save.
- 7
Keep a safety cushion after you buy
Homes come with surprise repairs. Type your monthly costs to see how much emergency money to keep after paying the down payment.
How big should my emergency fund be?
Size my safety fund →Tip: Many people set aside about 1% of the home price each year for repairs and upkeep.
Questions people ask
How much house can I afford on my salary?
A common rule is to keep your housing payment under about 28% of your monthly income before tax, and all debts under about 36%. Your real limit also depends on your savings, other debts, credit score and interest rate.
Do I need 20% down to buy a house?
No. Many loans allow much less, sometimes 3% to 5%. But with less than 20% down you usually pay mortgage insurance, and your monthly payment will be higher.
What costs are there besides the mortgage?
You will usually pay property tax, home insurance, maybe HOA fees, and repairs. When you buy you also pay closing costs, which are often a few percent of the loan.
Is a 15-year or 30-year mortgage better?
A 15-year loan has bigger monthly payments but much less total interest. A 30-year loan has smaller payments, which can give you more breathing room. Try both in the mortgage calculator to compare.