Gearing up to start your home search before the last leaf falls? Before you begin touring open houses and analyzing market conditions just yet, it’s important to first determine how much you can actually afford. Sounds simple right? As it turns out, sizing up your potential mortgage is in fact easier said than done. But don’t worry, we’re here to help.

Below, we’ve broken down the steps you should take — and the factors you should consider — to help you find the right home at the best price.

#1 Do The Math

Why not do a quick calculation to get a rough estimate of how much you can afford based on your income alone? Most financial advisors recommend spending no more than 25% to 28% of your monthly income on housing costs. Our advice? Add up your total household income and multiply it by .28.

#2 Check Your Credit Score

The reality is that you’ll need good credit to qualify for a mortgage loan. And the better your score, the better your chances are for a lower interest rate. Of course, it’s always a good idea to establish your credit before talking to a lender so you can avoid surprises, or work to improve your credit score if it’s not up to par. The good news? You can check your credit for free once a year through AnnualCreditReport.com or by contacting one of the three national credit reporting agencies: Experian, Equifax and TransUnion. If you’re not satisfied with your score, try paying more bills on time and reducing your credit card balances, for starters.

#3 Gather Your Financial Documents

Before using an affordability calculator or talking to a lender about prequalifying, you’ll need to gather some information together. This includes:

• Your monthly and annual household income
• Your credit score
• Existing debt, including credit cards, car loans, and student loans
• Your savings and investments, which will help determine how much of a down payment you can afford
• Property taxes for the area you’re looking to buy in, which a real estate agent can help you estimate
• Current interest rates
• The cost of homeowners insurance, which you can get from your insurer or request a free quote for online

Curious for a deeper dive into the world of mortgages? Check out this post to learn everything you should know about mortgages today.

#4 Determine Your Debt-To-Income Ratio

Mortgage lenders will look at your debt-to-income ratio (DTI), which is a comparison of your monthly income to your monthly debt, before approving you for a mortgage. A lower DTI will improve your chances of getting a loan. To increase your chances of approval, you want a DTI below 43%.

To calculate your DTI, divide your total monthly payments by your total monthly income before taxes.

#5 Create A Lifestyle Budget

Now that you have a good idea of your ideal price range, you can narrow that estimate down even more by creating a budget that factors in all your other costs, like gas, groceries, and entertainment expenses. Remember: Just because an online calculator says you can afford a $1,600 monthly mortgage payment doesn’t mean you should be paying that much in reality!

➤ Get more homebuying advice with these posts next:

• How to Buy a Home in a High-Interest Real Estate Market
• How Many Homes Should I Tour Before Submitting an Offer?
• How to Buy a Home with No Money Down

#6 Consider Homeownership Costs

There’s just no getting around it — owning a home is expensive. Between repairs, upgrades and maintenance, those bills can add up. Your emergency 3–6 months fund might fund major home disasters, but if you’re planning to embark on home upgrades or buying for the first time, make sure you add room in your monthly budget to cover unexpected expenses.

#7 Factor In Fees And Closing Costs

Don’t forget about fees and closing costs — from appraisal fees to attorney expenses, inspection costs, title fees, and more.

#8 Working With The Right Team Matters

When it comes to something as important as your financial future (and present), we refuse to take shortcuts. That’s why, over the years, we’ve built a partnership with Patti O’Connor of IntroLend Capital Mortgage. At the end of the day, Patti isn’t just your lender — she’s the advisor who will be by your side when you need advice on what kind of mortgage you can afford.

Do you have questions about buying a home in DC? Give us a call at 202.280.2060 or email us directly at jsmira@jennsmira.com.