How do I know what I can afford to spend on a house?

What you can afford depends on how much you make, your current monthly expenses, your credit rating, how much your down payment will be, and the interest rate of the loan. Owning a home is a great way to create wealth that you can pass on to your family, use to finance life's expenses, or pay for your retirement years. It starts with being smart about money.

HUD’s “Determining What You Can Afford Worksheet” can help you calculate your income and expenses to help you understand what you can afford. The U.S. Department of Housing and Urban Development (HUD) wants all Americans to manage their money and have the option of preparing for homeownership.

• Set a goal to save a certain amount of money each month and stick to it.Prioritize your family’s spending needs so that saving becomes second nature.
• Prioritize your family’s spending needs so that saving becomes second nature.
  
• Communicate early and often with companies or banks you owe money to so you can work out problems before they grow larger.
  
• Know your credit score and what it means to banks and credit card companies and your future.
• Consider all the options, educate yourself, and be informed before you sign on the dotted line.
  

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