When choosing a mortgage, focus on what you can comfortably afford based on your overall financial situation, not just how much you qualify to borrow.

Lenders often tell you the maximum amount they’re willing to lend you, based on your income and debt ratios. Many online calculators also provide similar estimates. However, the amount you’re qualified to borrow doesn’t necessarily align with what you can actually afford to repay without stretching your budget. Lenders don’t consider all your family’s financial needs and priorities.

To determine what you can afford, assess your family’s income, monthly expenses, and savings goals to see what fits your budget without overextending. Also, consider that your mortgage payment could increase in the future, depending on the type of loan you choose. Be sure to factor in how potential higher payments will impact your finances.

Remember, your mortgage payment isn’t just the loan itself. You’ll need to account for other costs like homeowner’s insurance, property taxes, private mortgage insurance (PMI), and homeowners association (HOA) fees. These can add significantly to your monthly expenses. You may also face costs for home repairs and maintenance, so it’s essential to get estimates from your insurance agent, local tax assessor, HOA, and lender. Knowing what you can afford will help you identify a realistic price range for your home.

Don’t sacrifice your savings to afford a larger home. Make sure to continue saving for emergencies, retirement, education, and other financial goals, even after buying your home. Plan to maintain a healthy emergency fund to avoid falling into debt for unexpected costs like repairs or replacements.

Also, keep in mind that home-related expenses can rise over time. You might want to estimate potential risks like flooding, as this can affect your insurance rates and availability. If you’re in a flood zone, you may need or choose to purchase flood insurance at an additional cost. Energy efficiency, building codes, and other factors can also impact utility bills and insurance premiums over time.