First-Time Home Buyer Calculator: How Much House Can I Afford?

Property Taxes

Typically 1.0-1.5% of home value annually (varies widely by state). On a $300,000 home, expect $250-$375/month. High-tax states like NJ (2.5%) or TX (1.8%) can be $600-750/month. Taxes increase 2-5% annually.

Home Insurance

Usually 0.3-0.7% of home value ($75-175/month on $300K home). Higher in disaster-prone areas (hurricanes, wildfires, floods). Some high-risk areas can be $300-500/month. Shop multiple insurers—rates vary 30-50%.

PMI/MIP

Required if down payment is less than 20%. PMI: 0.5-1.5% of loan annually ($125-375/month on $300K loan), cancels at 20% equity. FHA MIP: 0.85% for life of loan ($212/month on $290K loan), never cancels.

Maintenance & Repairs

Budget 1-2% of home value annually ($250-500/month on $300K home). Covers HVAC service, plumbing, electrical, appliances, roof repairs, exterior maintenance. Major replacements: HVAC $5-10K, roof $8-15K, water heater $1-2K.

HOA Fees

If buying a condo or in planned community, expect $100-500/month (some luxury areas $1,000+). Covers common area maintenance, amenities, sometimes exterior/roof. HOA fees increase 3-5% annually and are mandatory.

Utilities

Expect $200-400/month (electric, gas, water, sewer, trash) depending on home size and climate. A 2,000 sq ft house costs 2-3x more than an 800 sq ft apartment. Budget an extra $150-250/month over current rent.

3.5% FHA Loan

• Down Payment: $10,500 on $300K
• Credit Score: 580+ (500+ with 10% down)
• MIP: $212/mo (0.85% for life)
• Monthly Payment: ~$2,300
• Pros: Low down payment, easier credit approval
• Cons: Lifetime MIP adds $76,320 over 30 years

3% Conventional 97

• Down Payment: $9,000 on $300K
• Credit Score: 620+ required (680+ for best rates)
• PMI: $175/mo (cancels at 20% equity)
• Monthly Payment: ~$2,250
• Pros: Lower MI than FHA, MI cancels at 20%
• Cons: Stricter credit requirements, lower debt ratios

5% Conventional

• Down Payment: $15,000 on $300K
• Credit Score: 620+ (680+ for best rates)
• PMI: $143/mo (cancels at 20% equity)
• Monthly Payment: ~$2,200
• Pros: Lower PMI, better equity position, MI cancels
• Cons: Need more cash upfront

20% Conventional

• Down Payment: $60,000 on $300K
• Credit Score: 620+ (680+ for best rates)
• PMI: $0 (no MI required!)
• Monthly Payment: ~$1,850
• Pros: No PMI saves $175-300/mo, lower rate, better equity
• Cons: Takes years to save, opportunity cost

Reasons to Buy with Less Than 20% Down:

• Home appreciation outpaces PMI cost: If homes are appreciating 5-8% annually in your market, waiting 2-3 years to save could cost you $30,000-$50,000 in missed appreciation—far more than PMI costs ($4,200-6,000/year).
• Rent is expensive: If you're paying $2,000/month rent on a home you could own for $2,200/month (including PMI), you're building zero equity while renting.
• Building equity now: Even with PMI, you're building equity through principal payments and appreciation. After 5 years at 5% down, you'll have 15-20% equity (more in appreciating markets).
• Tax benefits and stability: Homeownership provides mortgage interest deduction (if you itemize) and locks in housing costs versus rent increases.

Reasons to Wait and Save 20%:

• Slow appreciation market: If homes are appreciating <3% annually, PMI costs may exceed appreciation benefits.
• Low current rent: If you're living with family for $500/month or have a rent-controlled apartment, the savings from waiting may be worth it.
• Unstable income: If your job or income is uncertain, having 20% down provides a larger equity cushion if you need to sell quickly.
• Can save 20% within 12-18 months: If you're close to 20% down, waiting another year may be worth it to eliminate PMI permanently.

💡 Smart Strategy: Buy with 5-10% down if you have good credit (680+) and homes are appreciating 4%+ annually. Refinance to remove PMI once you hit 20% equity through payments + appreciation (typically 4-6 years). This lets you start building equity now while minimizing long-term PMI costs.

FHA Loans (Federal Housing Administration)

• Down Payment: 3.5% minimum (580+ credit) or 10% (500-579 credit)
• Advantages: Lower credit scores accepted, more lenient debt ratios (up to 43% DTI with compensating factors), sellers can pay up to 6% of closing costs
• Disadvantages: Upfront mortgage insurance (1.75% of loan, can be rolled in), lifetime monthly MIP (0.85% annually, $212/mo on $300K loan)
• Best for: Credit scores 580-680, high existing debt, or can't save more than 5% down within 1 year

VA Loans (Veterans Affairs)

• Down Payment: $0 (100% financing)
• Advantages: No PMI/MIP, no minimum credit score (lenders typically want 620+), lower interest rates, sellers can pay all closing costs
• Disadvantages: VA funding fee (2.3% first-time use, can be rolled into loan), limited to primary residence, appraisal can be strict
• Eligibility: Active duty military, veterans, reservists/National Guard with 6+ years service, surviving spouses

USDA Loans (Rural Development)

• Down Payment: $0 (100% financing)
• Advantages: No down payment required, competitive rates, lower PMI than FHA
• Disadvantages: Income limits (typically 115% of area median), property must be in eligible rural area, annual MIP (0.35% vs FHA's 0.85%)
• Best for: Moderate income families buying in qualifying rural/suburban areas (many suburbs qualify—check USDA eligibility map)