The Approval Trap
Banks might approve you for more than you should actually spend. A lender looks at your debt-to-income ratio and may approve a payment that stretches you thin. Just because you CAN borrow $250,000 doesn't mean you SHOULD. Leave room in your budget for life—emergencies, vacations, retirement savings.
The 28/36 Rule
Financial experts recommend spending no more than 28% of your gross monthly income on housing costs (mortgage, taxes, insurance) and no more than 36% on total debt (housing plus car payments, student loans, credit cards). If you make $4,500/month gross, aim for housing costs under $1,260.
The Hidden Costs
Your mortgage payment is just the beginning. Add property taxes (in Kentucky, about 0.8-1.2% of home value annually), homeowner's insurance ($800-1,500/year), private mortgage insurance if you put down less than 20%, utilities (often higher than apartments), and maintenance (budget 1-2% of home value yearly). A $150,000 house might cost $1,100/month in mortgage but $1,500+/month in total housing costs.
