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Preparing to buy your first home in New Hampshire? You’ve probably spent some time scrolling through online listings and imagining which home could be yours. But before you schedule showings, there is one important question to consider: How much house can I afford?
The answer depends on more than the home’s listing price. Your income, monthly debts, credit history, down payment, interest rate, property taxes, insurance, and other homeownership expenses all shape what you can comfortably afford.
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What fits your monthly budget?
This is the question that matters most. A lender will review your finances and credit history to determine how much you qualify to borrow, but that does not always mean the payment will feel comfortable month after month.
But in order to find the monthly amount you're comfortable with, your personal budget matters, too. It should leave room for groceries, transportation, childcare, medical expenses, savings, and unexpected costs. The goal is to find a monthly payment that fits your current lifestyle, not simply to buy the highest-priced home a lender will approve.
Top three factors that determine how much you can borrow
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Your income and monthly debt
Your lender will begin by reviewing your debt-to-income ratio, or DTI. Your DTI helps determine whether you can manage your monthly mortgage payments.
For example, if your gross monthly income is $6,000 and your monthly debts, including your estimated housing payment, total $2,400, your DTI would be 40%.
DTI requirements vary by mortgage program, so an approved lender can help you understand which options may work for you.
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Your credit score
Your credit score can affect the mortgage programs available to you, the interest rate you receive, your monthly payment, and the cost of mortgage insurance.
If your credit score is lower than you hoped, homeownership may still be within reach. New Hampshire Housing offers mortgage programs and educational resources to help you prepare for the next step.
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The interest rate
Your interest rate directly affects both your monthly payment and how much home you may be able to afford. Your rate can depend on market conditions, your mortgage program, credit history, down payment, property type, and whether you use financial assistance.
New Hampshire Housing posts its current mortgage rates online. Because rates can change, speak with an approved lender for an estimate based on your situation.
Don’t skip other homeownership costs
A home’s purchase price alone does not tell you the full monthly cost of owning that home. Your housing payment may include:
- Mortgage principal and interest
- Property taxes
- Homeowners insurance
- Mortgage insurance, if required
- Homeowners association fees, if applicable
Property taxes also vary by community in New Hampshire. Two similarly priced homes in different towns could have noticeably different monthly payments.
You will also want to budget for energy and maintenance costs like heating, electricity, water, snow removal, routine maintenance, and unexpected repairs, which can vary depending on the size, age, and condition of a home.
Build your budget before you start touring homes
Touring homes is the most fun part of the process; we know. But before you start picturing yourself or your family watching the game in your new living room, take a close look at your monthly budget:
- Calculate your monthly take-home pay.
- List your regular bills and debt payments.
- Set aside money for savings and emergencies.
- Estimate the complete cost of owning a home.
- Decide how much you can spend on housing without stretching your budget too far.
Think about how the payment would feel if property taxes, insurance, or heating costs increased. Would you still be comfortable if the home needed an unexpected repair?
New Hampshire Housing’s mortgage calculator can give you an early estimate. An approved lender can provide a more complete picture using current rates, local property costs, and available New Hampshire Housing programs.
Complete first-time homebuyer education early
New Hampshire Housing offers online homebuyer education that is required for certain mortgage programs and assistance options. Even when it is not required, the course can help you feel more prepared for the decisions ahead.
You can learn about credit, budgeting, mortgage qualification, working with homebuying professionals, closing, and the ongoing costs of owning a home. You can also review these common first-time homebuyer mistakes to learn what to watch for before beginning your search.
What to do now
How much house you can afford comes down to your complete financial picture and the mortgage programs available to you.
Start by contacting a New Hampshire Housing Approved Lender. Your lender can help you compare programs, understand current requirements, estimate your monthly payment, and determine whether you may qualify for assistance.
With a realistic budget and the right support, you can begin your home search knowing that you are looking for a home that fits your life today and your plans for the future.
Program availability, funding, interest rates, income limits, purchase price limits, and eligibility requirements are subject to change. This article provides general educational information and does not constitute a commitment to lend or individualized financial advice.
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