Buying a home is an exciting milestone—but it’s also one of the biggest financial decisions you'll ever make. Whether you're a first-time buyer or a seasoned homeowner, understanding how to budget properly can help you avoid surprises and make smart, confident choices. Here’s what to consider when creating a realistic homebuying budget.
1. Estimate Your Monthly Mortgage Payment
Your mortgage payment will likely be the largest chunk of your monthly housing budget. It typically includes:
Principal: The amount you borrowed.
Interest: What the lender charges you to borrow the money.
Taxes: Property taxes, paid annually but often bundled into your monthly payment.
Insurance: Homeowners insurance is also often paid monthly through your lender.
How to Estimate: A good rule of thumb is the 28% rule—your monthly housing costs (including mortgage, taxes, and insurance) should not exceed 28% of your gross monthly income. You can also use our online mortgage calculator. Input:
The home price
Your down payment
Estimated interest rate
Loan term (typically 15 or 30 years)
Property taxes and insurance (more on those below)
Example:
Buying a $300,000 home with 20% down and a 6.5% interest rate could mean a total monthly payment around $2,000–$2,400, depending on taxes and insurance in your area.
2. Don’t Forget Property Taxes
Property taxes vary widely depending on your location, but they can add hundreds of dollars to your monthly cost. Most lenders collect property taxes as part of your mortgage payment and pay them on your behalf.
Tip:
Check the local tax rate and multiply it by the home’s value to estimate the annual cost. Then divide by 12 to get the monthly amount. In the Southwestern Ohio and Northern Kentucky region, property taxes range from .86% to 1.75%, so you can look specifically for the municipality where you plan to move or use a general estimate of 1.5% if you are haven't targeted an area yet.
3. Factor in Homeowners Insurance
Homeowners insurance protects your property from damage or theft and is usually required by lenders. The average cost in the U.S. is around $1,200 per year, but it depends on your home’s location, size, and coverage level.
Pro tip: Ask your Sibcy Cline insurance agent for a quote on your prospective home before you buy.
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4. Consider Private Mortgage Insurance (PMI)
If your down payment is less than 20%, you may have to pay private mortgage insurance (PMI). This protects the lender in case you default and can add 0.5% to 1.5% of the loan amount annually.
This is usually bundled into your monthly mortgage payment until you’ve built up 20% equity.
5. Plan for Ongoing Maintenance Costs
Owning a home means being your own landlord—which also means footing the bill for repairs and maintenance.
Budgeting Tip:
Plan to set aside 1%–3% of your home’s value each year for maintenance. That’s $3,000–$9,000 annually on a $300,000 home.
Common maintenance costs include:
HVAC servicing
Roof repairs
Plumbing or electrical issues
Lawn care and landscaping
Gutter cleaning
You won’t face all these expenses at once, but it’s smart to be prepared.
6. Watch for HOA Fees
If your home is part of a homeowners association (HOA), you’ll have monthly or annual fees that cover shared amenities and maintenance of common areas. HOA fees can range from $100 to over $1,000/month, depending on the community. Make sure to include this in your monthly housing budget if it applies.
7. Account for Utilities and Moving Costs
You may already be used to paying for utilities like electricity and internet, but costs can increase if you're moving into a larger space. Factor in:
Electric and gas
Water and sewer
Trash collection
Internet and cable
Move-in costs (truck rental, movers, utility deposits)
Final Thoughts: Build in a Buffer
Budgeting for a home isn’t just about affording the mortgage—it's about making sure you can comfortably handle all the hidden costs that come with homeownership. Set aside an emergency fund for unexpected repairs and fluctuations in expenses.
By taking a detailed look at the full picture, you'll be better equipped to find a home that fits your lifestyle—and your wallet.
Want help estimating your total homeownership costs? Reach out to a trusted Sibcy Cline mortgage loan officer who can walk you through the numbers based on your specific goals and location.
From financial planning to re-financing, we're here for you for the life of your loan. We offer competitive rates and quality service and our goal is to make the loan process a smooth one. Our automated underwriting system not only speeds up the process...
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