Not sure how much house you can afford in Houston, Texas? Setting a budget is the first step you should take in the home-buying process. Establishing a budget helps you figure out exactly how much of a home you can comfortably afford and ensures you avoid financial pitfalls along the way.
In this post, our team at Your Home Sold Guaranteed Realty - Chris Schmidt Team will cover what factors to consider when determining a home-buying budget. We’ll also discuss what to expect from the housing market in Houston.
Key Takeaways:
- Start by examining your financial situation. Understanding your cash flow gives you a clear picture of how big of a down payment you can make.
- A pre-approval letter acts as a firm budget because it tells you exactly how much your loan is for.
- In recent months, homes in Houston sold for a median price of $309,000, which is a 4.7% increase compared to the same time last year.
How Much House Can You Afford? – 5 Factors to Consider
- Assess Your Finances: Start by examining your financial situation. This means calculating your monthly income, monthly expenses, debts, and savings. Understanding your cash flow gives you a clear picture of how big of a down payment you can make and how much you can pay on your mortgage each month.
- Determine Your Down Payment: Down payments typically range from 3% to 20% of the home’s purchase price, with higher down payments generally offering better loan terms than lower ones. If you haven’t already, start saving for your down payment or explore down payment assistance programs.
- Consider Your Debt-to-Income Ratio (DTI): Your DTI is calculated by dividing your total monthly debt payments by your gross monthly income and is expressed as a percentage. Aim to keep your DTI below 43% to increase your chances of qualifying for a mortgage and securing competitive interest rates.
- Factor in Additional Costs: In addition to your down payment and monthly mortgage payments, be sure to budget for other expenses associated with homeownership, such as property taxes, homeowners insurance, private mortgage insurance, maintenance and repairs, utilities, and HOA fees.
- Get Pre-Approved for a Mortgage: After figuring out your finances, apply for mortgage pre-approval right away. A pre-approval letter acts as a firm budget because it tells you exactly how much your loan is for. It also has the benefit of proving to sellers that your intentions are serious.
What is the Housing Market Like in Houston, Texas?
In recent months, homes in Houston sold for a median price of $309,000, which is a 4.7% increase compared to the same time last year. Most homes spend a median of 47 days on the market, which is a decrease of three days from the previous year.
Most homes sell for 3% below their original asking price, while the hottest homes sell for their exact original listing price. The hottest homes also sell faster, spending only 11 days on the market before selling.
Homes in Houston have a sale-to-list price ratio of 96.5% and 11.1% of homes sell above their original asking price. In addition, 26.2% of homes drop their asking price at some point after being listed.
Buy a Home in Houston Risk-Free with Chris Schmidt
Determining how much house you can afford in Houston requires working with an experienced real estate professional. At Your Home Sold Guaranteed Realty - Chris Schmidt Team, Chris Schmidt and our team have been continually ranked as the best realtor in Houston.
We’ve helped many buyers find homes that match their budget and preferences thanks to our in-depth knowledge of the local housing market and unique buyer guarantees, including our Buy it Back Guarantee.
If you are interested in working with our team to buy a home, call or text today at 713-322-5604. You can also use the form below. Don’t have to wait to find your dream home in Houston!
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