More than you think, less than you want? How much house you can afford

How much house can I afford?
If that’s something you’ve wondered about, you’re not alone. Hundreds of thousands of Americans have typed that question or variations of it into internet searches in recent weeks, according to a USA TODAY analysis.
It’s easy to understand why: From credit scores and debt-to-income ratios to property taxes and school systems, there are endless variables that go into home prices – not to mention your ability to finance them.
And while it’s easy to ask the question online, the answers you get might be imperfect, or at best impersonal. So we rounded up several experts from the real world to help would-be home buyers get a personalized understanding of the process. The key takeaway: Though there’s more help out there than you may know, you probably want to exercise more restraint than you realize.
We’ll explain that and more. Read on to find out what to do when you find yourself asking “can I afford that house?”
Buy that dream house: See the best mortgage lenders
Whether you’re ready to buy now or homeownership is a long-term goal, one of the smartest things you can do is ask for help.  
All across the country, you can find housing counselors who have been trained and sponsored by the federal government’s Department of Housing and Urban Development. An organization called NeighborWorks America, which has affiliates in every state, Washington, D.C., and Puerto Rico, is one great place to start your search for a counselor.
One of the many services housing counselors provide is helping ordinary Americans become homeowners. Like a real estate agent, how-to book, lender and credit agency all in one, they take a holistic approach. That may mean that they help you clean up your credit and set a savings budget now so you can afford a home in a few years. Or they may guide you in applying for a grant to cover your down payment if you’ve already identified a house you want to buy.
An important component of the HUD-approved counseling process is what experts call “sustainable” homeownership.
More:As mortgage rates hit 18-month low, what will the Fed meeting mean for housing?
When the housing market is competitive and expensive, it may seem as if your only choice is to stretch your budget to the max to afford a home. But new homeowners inevitably have unforeseen expenses after closing, says Noelle Melton, the head of homeownership programs and lending for NeighborWorks America.
So counselors help clients budget not just for the purchase of the home but for the costs of keeping it. They also stay in touch with clients and can provide “post-purchase” assistance when those unknowns crop up.
Housing counselor programs are generally geared toward low- and moderate-income Americans and require very nominal fees. If you’d like to try a different type of professional, you might want to consider a financial planner. But unless you have very deep pockets, your best bet is probably someone who’s paid either by the hour or by the project or assignment.
Heather Liston is one such adviser. Her business, Clarity Financial, is based in San Francisco, one of the priciest cities in America for buying a house. Liston calls herself an “advice only” planner and says a consultation for helping a client determine “how much house I can afford” – and whatever steps come next – could cost as little as $900.
Liston crunches numbers with clients, taking a more personal approach than any online calculator can. But some of the real value in working with her and other financial professionals is help with the emotional questions, she says.
Some people may want to buy a house because they were always told buying a house was part of being an adult, she says. Others would rather sacrifice ownership if it means having to move away from a place they love.
A good financial planner will help not just with the money, Liston says, but also the personal aspects of such a major life decision.
Another advantage of working with a professional to help prepare you for homeownership is the range of resources they can offer.
Housing counselors, for example, can identify sources for down payments, affordable loans and more. They also can “layer” multiple programs and money sources, says Melton from NeighborWorks.
In the same way, financial planners may be able to help you identify tax strategies, investment opportunities and other ways to stretch your dollars. Both types of professionals can help determine the right types of mortgages for you.
If you’re still hesitant about asking for help, however, there are options for self-service. One is the appropriately named Down Payment Resource, based in Atlanta. The organization maintains a directory of available assistance for house hunters.
Sean Moss, the group’s EVP of product and operations, stresses that “down payment assistance” doesn’t mean only money for down payments. Many programs allow their funds to be used in various ways that make homeownership possible for first-timers or others who would otherwise struggle to get into a home. That may include paying for closing costs, buying down a high interest rate, paying a real estate agent’s commission, and more.
See also:As new real estate agent rule goes into effect, will buyers and sellers see impact?
And if you think those kinds of programs couldn’t possibly apply to you, think again. A recent Down Payment Resource analysis shows that more than 43% of all purchase mortgages could have been eligible for down payment assistance programs of some sort.
Don’t forget that what’s considered “moderate income” changes depending on where you live. In some areas of Virginia, for instance, a household with two or fewer people making as much as $176,000 may qualify for state-sponsored grants. (Most entities that tie affordability to local economies use what are called Area Median Incomes; a national look-up tool can be found here.)
But while there may be more help out there than you realize, on the flip side, you should probably be more cautious than you think.
You don’t want to be “house-rich but cash-poor.” That means striking a fine balance between stretching your dollars to get into a house you love and having the cash to maintain it in the long run. Even in a difficult and competitive market, where homes are bid up well over their asking price, you may come to regret borrowing as much money as you possibly can to afford as much house as you can get.
Be very cautious in relying on estimates from online calculators, and even the prequalification amounts you may receive from lenders, says Lisa Gill, a mortgage and housing expert with Consumer Reports. Those figures usually represent the maximum you might be eligible for, not your actual, personal monthly budget.
It’s also crucial to set aside some savings for unexpected circumstances, Gill says: not just the roof that leaks or the heater that dies but the possibility of a job loss or pay cut, and other life changes. Don’t forget that surging home prices also lift property tax bills – and that homeowners insurance costs are rising rapidly to keep up with an uncertain climate.
Yet your house shouldn’t just be a chore, Gill says. You may want to splurge on a new paint job, countertops, floors, or other fun things.
That’s a key point. Yes, for most Americans homeownership is a smart financial decision: a wealth-builder and source of stability. But a house you buy for yourself should also be a home. Enjoy the process and make it work for you.