Wondering how much house you can afford in Ocala, Florida? Buying a home is an exciting process, but it can be challenging to figure out how much you can realistically afford. Setting a budget before you begin looking for houses is essential to ensure you don’t strain your finances.

In this post, our team at Your Home Sold Guaranteed Realty - Coldwell Real Estate Services will discuss five steps to create a home-buying budget and determine the price range you should stick to.

Key Takeaways:

• A good rule of thumb is to keep your mortgage payment under 25% to 30% of your monthly income. 
• Beyond just your mortgage, keep in mind property taxes, homeowners insurance, HOA fees (if applicable), maintenance costs, and closing costs.
• Working with a lender to get pre-approved for a mortgage will help you settle on a price range. Your lender can help you review your financial situation.

How Much House Can You Afford? – 5 Steps to Set a Budget

Know Your Monthly Income

The first step to figuring out how much house you can afford is to know your exact monthly income. Start by taking a look at your gross monthly income. This is your total pay before any taxes or deductions are taken out. You want to have a clear picture of the amount you take home every month, as this amount will be used by your lender to determine the monthly mortgage payment you can manage. 

Account for Debt

After you know what your income is, make a list of all your debts and how much you pay each month toward them. This includes credit card bills, student loans, auto loans, and any other regular debts you pay. Add up the total amount you pay out every month and deduct it from your monthly income. This number will give you an idea of how much you can contribute toward a mortgage payment.

Calculate Housing Costs

Now, start making a list of all the costs associated with buying a home– including both the cost of purchasing the property itself and ongoing homeownership expenses. 

A good rule of thumb is to keep your mortgage payment under 25% to 30% of your monthly income. So if you take home $7,000 per month, your maximum mortgage payment would be around $2,100. This allows room in your budget for additional housing costs like property taxes, insurance, utilities, maintenance, and HOA fees.

In Ocala, the median home price is around $242,000. With a 15% down payment of $36,300, your mortgage amount would be $205,700. At a 6.13% interest rate on a 30-year fixed loan, your monthly mortgage payment would be around $1,780 per month. This amount would fall within 30% of a $7,000 monthly income.

Consider Down Payment 

The larger the down payment you can make, the lower your monthly mortgage payments will be. The average down payment ranges between 15% to 17%. Of course, not everyone can afford to put this much down, especially first-time home buyers. For this reason, first-time buyers should consider down payment assistance programs and other first-time buyer financing options. These programs can lower your down payment to three to five percent, or even as low as zero down. Talk to your lender to evaluate your options.

Weigh Variable Expenses 

Beyond just your mortgage, keep in mind property taxes, homeowners insurance, HOA fees (if applicable), maintenance costs, and closing costs. Ocala has relatively low property taxes, but factor at least 1.5% of the home value per year. Home insurance may range from $800 to $2,000 annually. In addition, plan around 1% of the home value each year for maintenance and factor in closing costs of 3 to 5% of the home price.

Reach out to Lenders

Working with a lender to get pre-approved for a mortgage will help you settle on a price range. Your lender can help you review your financial situation and crunch the numbers carefully. You want to find a home where the monthly payment fits comfortably within your budget. Buying a home that stretches your budget too thin will only lead to financial stress. 

Buy a House in Ocala with Scott Coldwell

Finding a home within your budget starts with hiring the right realtor. If you’re looking for the top realtor in Ocala and all of North Central Florida, look no further than Scott Coldwell and Your Home Sold Guaranteed Realty - Coldwell Real Estate Services.  We’re experts in the North Central Florida housing market and have years of experience helping buyers like you find their dream homes.

Working with us is a unique experience compared to other realtors because we offer unique buyer guarantees that make the process risk-free. This includes our Buy it Back Guarantee, which gives you the option to return your home in the event you’re unsatisfied with it for any reason.

To learn more about working with Your Home Sold Guaranteed Realty - Coldwell Real Estate Services to buy a house in Ocala or the surrounding areas, call 352-290-3512, or fill out the form on this page.

To Discuss Your Home Sale or Purchase, Call or Text Today and Start Packing!