If you’re thinking about buying your first home, you’ve probably asked yourself this question at least a dozen times: “How much house can I actually afford?” It’s one of those things that keeps you up at night, scrolling through listings that might be way out of your budget—or playing it too safe and missing out on homes that could actually work.

Let’s break this down together so you can shop with confidence and avoid falling in love with a house that’ll stretch your finances too thin.

The 28/36 Rule: Your Starting Point

Here’s a guideline that mortgage lenders love to use, and it’s pretty straightforward. It’s called the 28/36 rule:

• 28% – Your monthly housing costs (mortgage, property taxes, insurance, HOA fees) shouldn’t exceed 28% of your gross monthly income.
• 36% – Your total monthly debt payments (housing costs plus car loans, student loans, credit cards) shouldn’t top 36% of your gross monthly income.

So if you’re bringing home $5,000 a month before taxes, you’d ideally keep your housing payment under $1,400 and all your debts combined under $1,800. These aren’t hard-and-fast rules, but they’re a solid reality check.

Look Beyond the Purchase Price

Here’s where first-time buyers often get tripped up—the sticker price isn’t the full story. When you’re figuring out what you can afford, you need to think about:

• Property taxes – In Massachusetts and New Hampshire, these vary wildly by town. A $350,000 house in one community might cost you $3,000 annually in taxes, while a similar home elsewhere could run $7,000 or more.
• Homeowners insurance – Budget around $1,000-$2,000 per year, though this depends on your home’s value and location.
• HOA fees – If you’re buying a condo or townhouse, these monthly fees can add hundreds to your payment.
• Maintenance and repairs – A good rule of thumb? Set aside 1-2% of your home’s value annually. That $300,000 home? Plan for $3,000-$6,000 in upkeep each year.
• Utilities – Heating a New England home isn’t cheap, especially if you’re moving from an apartment where utilities were included.

Find more real estate terms.

Your Down Payment Reality Check

You’ve probably heard you need 20% down, right? That’s the ideal scenario because it helps you avoid private mortgage insurance (PMI) and can score you better interest rates. But here’s the thing—plenty of first-time buyers put down less.

FHA loans let you put down as little as 3.5%, and conventional loans sometimes allow 3-5% down. There are also first-time homebuyer programs in Massachusetts and New Hampshire that can help with down payment assistance.

The trade-off? A smaller down payment means a bigger loan, higher monthly payments, and potentially PMI (usually 0.5-1% of your loan amount annually). It’s not a dealbreaker, but it’s something to factor into your affordability calculation.

What Lenders Actually Look At

When you apply for a mortgage, lenders dig into your finances to figure out what they’ll approve you for. They’re checking:

1. Credit score – Generally, you’ll want at least 620 for conventional loans, though higher scores get you better rates.
2. Debt-to-income ratio – That 36% number we talked about earlier matters here.
3. Employment history – Lenders like to see steady income, typically at least two years in your current field.
4. Assets and savings – They want to know you’ve got reserves beyond your down payment for closing costs and emergencies.

Just because a lender pre-approves you for a certain amount doesn’t mean you should max it out. They’re looking at what you can technically afford—you need to think about what you’re comfortable paying.

The Hidden Costs of Homeownership

Let’s talk about the expenses that catch people off guard:

The furnace dies in January. The roof starts leaking during a spring rainstorm. The dishwasher gives up the ghost. These things happen, and they’re not cheap.

Then there’s the fun stuff—lawn care, snow removal (especially relevant here in the Northeast), painting, replacing that ugly carpet. It adds up faster than you’d think.

And don’t forget closing costs, typically 2-5% of your purchase price. On a $400,000 home, that’s $8,000-$20,000 you’ll need at closing on top of your down payment.

Creating Your Personal Affordability Number

Here’s a practical exercise: Sit down with your current budget and honestly answer these questions:

• What’s my monthly take-home pay after taxes and retirement contributions?
• What am I currently spending on rent, and could I comfortably pay more?
• Do I have an emergency fund with 3-6 months of expenses?
• What other financial goals do I have (saving for a wedding, paying off student loans, starting a family)?
• How stable is my job and income?

Your affordability number isn’t just about what a lender will give you—it’s about what lets you sleep at night without constantly worrying about money.

Start With Pre-Approval, Not House Hunting

Before you fall in love with that charming cape or modern condo, get pre-approved for a mortgage. This does two crucial things: it tells you exactly what you can afford, and it shows sellers you’re a serious buyer with financing in place.

Pre-approval is different from pre-qualification. Pre-qualification is a quick estimate based on basic info. Pre-approval means a lender has actually verified your finances and committed to lending you a specific amount (assuming nothing changes before closing).

The Local Advantage Matters

Here’s where working with local real estate professionals really pays off. Massachusetts and New Hampshire have different property tax structures, insurance requirements, and market conditions. Someone who knows Portsmouth is different from Boston, and both are different from the smaller towns scattered throughout both states.

A local agent can help you understand what your money gets you in different neighborhoods, which towns have the best school systems for your budget, and where property values are heading. They can also connect you with local lenders who might know about programs or options that national banks don’t offer.

Ready to Figure Out Your Number?

Buying your first home is exciting, but it shouldn’t be financially stressful. The key is being honest with yourself about what you can afford—not just today, but five or ten years down the road.

Whether you’re just starting to think about homeownership or you’re ready to get pre-approved and start touring properties, having an experienced local guide makes all the difference.

Give Laffely Real Estate Associates a call at (978) 255-4788. We’ll sit down with you, talk through your budget and goals, and help you figure out exactly how much house you can comfortably afford in Massachusetts or New Hampshire. No pressure, no judgment—just honest, personalized guidance to help you make the smartest decision for your situation.

Your first home is out there. Let’s find the one that fits both your dreams and your budget!