Risk of Buying a Home Over Your Budget

The risks of buying a home that’s significantly over your budget.

Here’s why staying within (or even slightly below) your budget is the best financial move:

1️⃣ Higher Mortgage Payments (PITI)

• Your monthly mortgage payment will increase substantially—not just the principal and interest, but also property taxes and insurance (PITI)- Principal, Interest, Taxes, Home Insurance.

• Depending on the loan terms, a $100,000 jump could mean hundreds of extra dollars per month in payments.

2️⃣ Debt-to-Income (DTI) Ratio Concerns

• Lenders look at your DTI ratio to ensure you can comfortably afford the loan.

• A higher purchase price means a higher DTI, which could affect loan approval or leave you stretched too thin financially.

• If your current reported income doesn’t support the new mortgage, you’d need to consistently report higher taxable income to qualify in the future.

3️⃣ Unexpected Expenses & Reserves

• Life happens—job changes, medical emergencies, home repairs, cars, etc.

• Stretching your budget leaves less room for savings, making unexpected financial burdens harder to manage.

• Lenders often require reserves (extra funds in the bank) to ensure you can handle unforeseen costs.

4️⃣ Smart Home Buying = Financial Peace

• Staying within budget means less stress, more financial flexibility, and the ability to comfortably enjoy your home.

• Consider looking at homes slightly below your pre-approval threshold to leave room for bidding, future expenses, or improvements.

My recommendation: Always keep your financial future in mind as you start your search!

I’m here to guide you and ensure you make a smart, long-term investment. Let me help you find your dream home and stay within your budget! Feel free to reach out to Kristie for a free consultation.

Kristie Kuo, Realtor

PSA, ABR, MRP

BHHS

kristie.kuo@bhhsamb.com