Buying a home is an exciting milestone, but if you're not careful, you could find yourself house poor—spending so much on housing costs that little is left for savings, emergencies, or everyday expenses. To avoid financial strain, follow these smart homebuying strategies.

1. Set a Realistic Budget

Before house hunting, determine how much home you can truly afford. Use the 28/36 rule:

• Your monthly housing expenses (mortgage, taxes, insurance) should not exceed 28% of your gross income.

• Total debt payments, including car loans and credit cards, should stay below 36% of your income.

2. Factor in All Homeownership Costs

Owning a home involves more than just a mortgage. Be prepared for:

• Property taxes and homeowners insurance

• HOA fees (if applicable)

• Utilities and maintenance costs

• Unexpected repairs (budget at least 1-3% of your home's value annually for upkeep)

3. Save for a Larger Down Payment

A bigger down payment reduces your mortgage amount, leading to lower monthly payments and less interest over time. Aim for 20% down if possible to avoid private mortgage insurance (PMI).

4. Get Pre-Approved, Not Just Pre-Qualified

A mortgage pre-approval gives a clearer picture of what lenders are willing to offer. However, only borrow what fits comfortably within your budget—not the maximum approved amount.

5. Buy Below Your Means

Just because you qualify for a $400,000 home doesn’t mean you should buy one at that price. Consider a more affordable home that allows breathing room in your budget for savings and lifestyle expenses.

6. Maintain an Emergency Fund

Unexpected expenses will arise. Keep three to six months’ worth of expenses in an emergency fund to cover potential job loss, medical bills, or major home repairs.

7. Plan for Future Expenses

Think beyond your current finances. Will your family grow? Do you plan to switch careers? Factor in potential lifestyle changes to ensure long-term affordability.

Avoiding the trap of being house poor starts with smart financial planning. By setting a realistic budget, saving for upfront costs, and preparing for ongoing expenses, you can enjoy homeownership without sacrificing financial freedom. A home should be a source of comfort—not stress!

Matt Witte strives to be the best realtor in Andover MA.

Any questions about real estate, reach out to Matt Witte Andover Realtor MA