How to Budget for Your First Home Purchase
- Alexi Mencio
- Oct 17
- 3 min read
Purchasing your first home is exciting — but it also comes with new financial responsibilities. Between the down payment, closing costs, and moving expenses, many buyers underestimate what it truly takes to prepare financially.
At Trust Lending, we help future homeowners map out a realistic budget that balances short-term savings with long-term stability. Here’s how to plan ahead and make your first home purchase a success.
Understand the True Cost of Homeownership
Buying a home involves more than your monthly mortgage payment. Be sure your budget includes:
Down payment: Typically 3%–20% depending on the loan program.
Closing costs: Around 2%–5% of your purchase price (for appraisal, title, escrow, and lender fees).
Home inspection and appraisal fees.
Property taxes and homeowners' insurance.
Utilities and maintenance: Expect to spend 1%–2% of your home’s value annually on upkeep.
Knowing the whole picture upfront helps you avoid last-minute surprises when you’re ready to close.
Determine Your Home-Buying Budget
Lenders typically recommend that your monthly housing expenses stay below 28% of your gross income — and your total debts (including credit cards and car loans) remain under 43%.
Example:
If your household income is $6,000 per month, your ideal total mortgage payment (including taxes and insurance) should be around $1,680 or less.
Trust Lending’s loan advisors can help calculate your exact affordability range based on your debt-to-income ratio (DTI), credit, and desired location.
Start Saving Early
Once you know your target price range, you can create a savings plan for your down payment and closing costs.
Tips:
✔ Automate transfers from each paycheck into a dedicated home savings account.
✔ Cut non-essential subscriptions or discretionary expenses.
✔ Look into Down Payment Assistance (DPA) or first-time buyer grants in your state.
✔ Save a cushion for post-closing expenses like furniture, appliances, and moving fees.
Strengthen Your Credit Profile
Your credit score directly affects your mortgage rate and loan approval.
To improve your credit before applying:
Pay bills on time, every time.
Reduce credit card balances below 30% of your limit.
Avoid opening or closing major credit accounts before applying.
Review your credit report for errors and dispute inaccuracies.
Even a modest score improvement can save thousands in interest over the life of your loan.
Get Pre-Approved Before You Shop
A mortgage pre-approval shows sellers you’re serious — and helps you shop with a clear budget in mind. During pre-approval, your lender will review income, credit, and assets to estimate your loan amount and rate.
This not only gives you confidence, but also helps you avoid falling in love with homes outside your price range.
Plan for the Long Term
Owning a home means thinking beyond the purchase. Plan for:
Emergency savings equal to at least three months of mortgage payments.
Future maintenance like roof repairs or A/C replacements.
Insurance coverage that fits your area’s risk (flood, hurricane, or earthquake protection if needed).
Budgeting for these expenses early keeps your finances stable long after closing.
Budgeting for your first home doesn’t have to feel overwhelming — it’s about preparation, discipline, and working with the right professionals.
At Trust Lending, we help first-time buyers understand every financial detail, from down payments to closing costs, so you can move forward with confidence.
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