Buying a home is exciting, emotional and yes – a little intimidating, especially when you start thinking about finances. If you’re concerned about how much house you can actually afford, you’re not alone. The good news is that by taking the right steps now, you can start your search with confidence and clarity – and an eye on the future.

Step 1: Know Your Budget

As you get ready to start swiping through listings, you should first figure out what fits comfortably in your monthly spending plan. A common rule of thumb? Keep your total housing costs — mortgage, property taxes, insurance and HOA fees — under 28% of your gross monthly income. For example, if you make $7,000 a month before taxes, you’ll want to keep your monthly housing expenses to $1,960 or less.

Step 2: Check Your Debt-to-Income Ratio (DTI)

Your DTI is very important to lenders, telling them how much debt you’re currently juggling and how the purchase of a home will increase your expenses. A lower DTI not only makes you a more attractive buyer – it can also unlock better loan terms and lower interest rates. Ideally, your total monthly obligations (car payments, student loans, credit cards, etc.) should stay below 36% of your income.

Step 3: Plan Your Down Payment

The more you put down, the less you have to borrow, which means lower monthly payments and possibly not having to get private mortgage insurance (PMI). A 20% down payment is great if you can manage it, but many buyers go with 3-10%, especially with FHA or first-time buyer programs. And don’t forget closing costs – usually around 2-5% of the purchase price.

Step 4: Explore Your Loan Options

All mortgages are not created equal. From 30-year fixed to adjustable-rate loans, the type you choose plays a big role in how much property you can take on (and how much you’ll pay over time). Before you talk with your lender, do some research, come prepared and ask plenty of questions. You’ll want to learn if you’re eligible for any governmental programs, if your monthly requirement could change and/or what will happen if you ever have unexpected financial difficulties.

Step 5: Think Beyond the Numbers

The bank might say you can afford that dream home – but whether or not you should actually purchase it is another question. Be honest about what matters most to you in terms of lifestyle. Do you want to travel, save more or splurge on concert tickets? Then you should leave room in your budget for these activities. Also remember that once you move in, you’ll most likely want to buy furniture and other household items as well as upgrade with new paint or cabinetry. The cost of personalizing your new residence can quickly add up.

Step 6: Use a Mortgage Calculator

Before you start seriously house shopping, try experimenting with an online mortgage calculator. It will show you how changes in interest rates, home prices and loan terms impact your monthly payment. Zillow and realtor.com® offer easy-to-use tools that take a lot of the guesswork out of the budgeting process, allowing you to see results in a matter of seconds.

Step 7: Talk to the Pros

Every day, real estate professionals and mortgage lenders navigate their clients through their buying journey – so lean on their expertise. A good agent will tailor the search to your recommended price range and refer you to a lender who will explain your options and help you make the best decisions for your unique circumstances. You should also chat with friends and family who have recently bought a home and can give you some valuable firsthand advice.

Determining how much home you can afford isn’t just about cold hard numbers. It’s about finding a place where you can live well and sleep easy. With a clear plan, a trusted team and a little prep, you’ll be well on your way to finding a property you love without breaking the bank.

Use this checklist to get the most out of touring a home and ensure that no detail gets overlooked during this critical step.

Pre-Visit: Do Your Homework

Before scheduling a visit, be clear about your budget and goals. In today’s competitive market, you’ll also want a preapproval letter from your lender. Next, research factors like property taxes and important area insights. It’s also helpful to review the online listing again and note any questions that are best addressed in person.

Be Prepared With a Toolkit

Use a notebook and your smartphone to record your impressions. It’s easy to forget details after you leave, especially if you’re touring a few homes. And don’t forget a flashlight, which comes in handy for inspecting dimly lit places like crawl spaces and attics.

First Impressions: Assessing the Exterior

Your tour starts the moment you arrive – as you take in the home’s curb appeal. The state of the yard and entryway can signal how well-maintained the house is overall. Are the roof and exterior in good condition? Are there cracks in the driveway? If so, consider if you have the budget for bigger ticket repairs like a new roof.

Inside the Home: Room by Room

You’re finally inside! It’s easy to get caught up in cosmetic elements and paint colors, but a thorough walk-through focuses on features that would be expensive to alter or repair:

Kitchen and Bathrooms: Check major appliances and fixtures. Turn on faucets to assess water pressure and drainage. Look for signs of heavy wear or leaks.

Bedrooms and Closets: Are the rooms large enough to accommodate your furnishings? Check the size of closets to see if they’ll meet your storage needs. Take note of flooring: Do you prefer carpet or hard flooring in bedrooms?

Basement and Attic: These spaces require extra attention during a tour since they may reveal water damage or structural issues.

Floors and Walls: Scan for cracks, stains or uneven surfaces, which could indicate foundation problems.

Beyond Basics: Use Your Senses

This is your chance to fully experience the place you may call home. Pay attention to small details to identify any red flags and determine if the home is truly a good fit.

Sight: Look for cosmetic repairs that may hide bigger problems like damaged walls or ceilings.

Sound: Take notice of noise from traffic or the neighborhood.

Smell: Check for musty odors, which could be a sign of mold, or overpowering air fresheners that might mask problems like pet odors.

Touch: Test windows, doors and light switches to be sure they’re functional.

Post-Visit: Consider Future Needs

Take stock of the pros and cons. If the property is a serious contender, plan to visit the neighborhood at different times of day to gauge traffic patterns. How move-in ready is the home? Does the layout work as is or would it require major renovations? Consider if the outdoor space meets your needs.

Keep your future plans in mind. If you’re expanding your family, are there enough bedrooms and bathrooms? Will you need a dedicated office space or first-floor bedroom? Planning ahead saves you from outgrowing a home too quickly. Finally, discuss your impressions with your agent, who can offer further insight and help you size up the property against others in the area.

Home tours are an essential step in the buying journey. Being prepared is key to ensuring you focus on the most critical aspects and get the most out of your tour.