The First Time Home Buyer and understanding budgets
Learn how first-time buyers can assess their finances, create a smart budget, and determine the right price range before buying a home.
Step 1: Review Your Monthly Income and Expenses
Before exploring listings, understand your financial baseline. Calculate your total monthly income and list all fixed and variable expenses.
Tools to Use:
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Mint
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YNAB
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Google Sheets
Pro Tip: Include all debt payments, savings contributions, and lifestyle spending in your monthly budget to get a true picture of what you can afford.
Step 2: Calculate Your Debt-to-Income (DTI) Ratio
Lenders use your Debt-to-Income Ratio (DTI) to evaluate your ability to manage mortgage payments.
Formula:
DTI = (Monthly Debt ÷ Gross Monthly Income) × 100
Ideal Targets:
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Housing-only DTI: under 28%
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Total DTI: under 36%
Step 3: Determine a Target Monthly Housing Budget
Stick to the 28/36 Rule:
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No more than 28% of your gross income on housing
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No more than 36% on all combined debts
Include:
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Principal & interest
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Property taxes
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Homeowners insurance
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HOA fees (if applicable)
Step 4: Plan for Upfront and Hidden Costs
Don’t let surprise costs derail your plans. Account for:
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Down payment (3–20% of purchase price)
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Closing costs (2–5%)
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Emergency repairs
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Furniture and moving expenses
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Utility deposits
Step 5: Get Pre-Approved by a Local Lender
Getting pre-approved boosts your confidence and credibility as a buyer. A lender will review:
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Credit history
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Income & employment
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Assets & savings
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DTI ratio
Step 6: Use Calculators as a Guide—Not Gospel
Online mortgage calculators are great for ballpark estimates—but don’t forget:
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They often omit taxes, insurance, and HOA dues
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They don’t factor in your lifestyle or future goals
Trust your own budget first, not just what the bank says you can borrow.
Step 7: Partner With a Local Real Estate Expert
A seasoned agent understands your budget goals, local market trends, and how to negotiate strategically. At Vignette Realty, we specialize in helping first-time buyers throughout Franklin, Highlands, Cashiers, Sylva, and Bryson City find the right home at the right price.
Final Thoughts: Buy Smart, Live Well
Budgeting isn’t just a finance exercise—it’s your roadmap to stress-free homeownership. With the right plan and the right team, you can buy your first home with clarity and confidence.
Ready to Take the First Step?
Let’s sit down and walk through your numbers together. Contact Vignette Realty today and let’s turn your homeownership dream into a well-budgeted reality.
Serving: Franklin, Highlands, Cashiers, Otto, Sylva, and all of Western NC
