The obvious question that most people have when they start looking to buy a house is how much can they afford to spend. The easiest way to figure this out is to apply for mortgage pre-approval; the bank will take your information and tell you how much you can afford. However it is a good idea to figure this out on your own as well since you may not actually be able to afford the amount the bank says you can.

The first thing that you are going to have to do in order to determine how much you can afford for your mortgage is to figure out how much money you have coming in. this is fairly easy to do you should be able to just look at your paystub. When you are doing this make sure that you use your after tax earnings.

The next thing that you need to do is figure out your monthly expenses. This means that you are going to have to gather up all of your bills and add them up. You are also going to have to figure out how much you spend on cash purchases each month as well. This can be tricky so you will probably want to track your spending for a few months so that you can get an accurate total.

The next step is one that a lot of people tend to skip over but it is pretty important. You have to add up all of the new expenses that you are going to have when you buy a house. The most common of these will be the property taxes but there will be others. Things like homeowners insurance, association fees, and utilities can really add up. If you have never owned a home before it may be hard to figure these out on your own so you will probably have to do some research to figure out how much all of this is going to cost you. Once you know this add it to your monthly expenses total.

Next you are going to need to subtract the expenses that will go away once you become a homeowner. The big one here is going to be your rent but there may be others for example if you move closer to work you will save money on gas. If you are planning on being able to cut down on your monthly expenses in order to buy a house include those in here.

Now all you have to do is subtract your expenses from your income and you should have an idea of how much you can afford each month. It is a good idea to leave a bit of a margin and not spend right up to this amount. Once you know how much you can afford each month there are lots of websites that you can go to and enter that information along with the interest rate and it will tell you how much you can afford.