Monthly Budget


Every buyer’s situation is unique.  Prior to becoming a Realtor®, I spent over 10 years as a loan officer working almost exclusively with first-time homebuyers.  In almost every case, proper planning ensured they had a pleasant experience owning a home.  Many who failed to plan ended up losing their homes or became financially strapped each month, unable to get ahead. 

  • CASH RESERVES – I strongly recommend every homebuyer have at least 12 months of cash in reserves once money for down payment and closing costs are paid.  For example, if you’re buying a home with a monthly payment of $1,000, it’s a great idea to have at least $12,000 in cash in the bank after deducting for the money you’ll spend on down payment and closing costs.  The reason for this is simple:  Home ownership can often lead to large, unexpected expenses for maintenance and repair.  While a home warranty can certainly protect a home owner from many surprise maintenance and repair costs of owning a home, they do not cover everything.   Foundation repair, the cost of insurance deductibles for major losses and other household repairs not covered by home warranties can potentially add up to thousands of dollars. 
  • MONTHLY PAYMENT – Decide what you can reasonably afford to spend per month for a house payment and make sure this amount includes the full PITI (principal, interest, taxes and insurance, plus mortgage insurance).  Be careful when using internet mortgage calculators that do not include taxes and insurance.  Most mortgage loans, such as FHA, VA, USDA and Conventional loans will require homebuyers to pay the additional costs of taxes and insurance as part of their monthly payment.  Conventional buyers who put down 20% or more may be allowed to pay their own taxes and insurance. 
  • LOCATION – Determine what, if any, additional costs you may incur by moving to a different part of town.  For example, if you are moving to a city that will require you to use a toll road to get to work each day, don’t forget to factor the cost of the tolls, plus additional fuel, into your monthly budget. 
  • ADDITIONAL COSTS – Utilities can be very expensive.  If you are moving into a larger home than you live now, it’s likely that you may incur higher monthly expenses for items like electricity and gas.  Additionally, make sure to factor in any costs that may be currently paid by your landlord if you rent (such as water, trash, etc.)
  • MAINTENANCE COSTS – If you’re a first-time homebuyer, don’t forget to include a monthly cost of maintaining your home.  The cost of maintaining a yard and swimming pool can be over $100 per month in some cases.   

Here’s a sample monthly budget I created.    You may download a copy of this budget in Excel format, which is editable and also auto-calculates, by clicking HERE.  (NOTE-You may have to use a web browser other than Microsoft Internet Explorer, such as Firefox, in order for this file to download properly.)

 ** NOTE – The figures used in this sample budget are for demonstration purposes only and are not necessarily meant to represent the true costs.  Do your own research and set your own realistic monthly estimates for these costs!


Income (after taxes):  
  Monthly Income From Work $5,000
  Additional Monthly Income $500
Home Costs:  
  Monthly Mortgage Payment $1,000
  Home Owner’s Association Dues $100
  Electric $250
  Gas $150
  Water/Sewer/Trash $100
  Cable TV $75
  Internet $50
  Home Telephone $40
  Cell Phone $100
  Lawn Maintenance $50
  Pool Maintenance $75
  Other Costs $100
  Life Insurance $50
  Health Insurance $100
  Auto Insurance $75
  Other Insurance $50
Other Expenses  
  All credit card payments $150
  Student Loan Payments $200
  Car Payments $575
  Other $100
Cost of Living Expenses:  
  Gas $200
  Groceries / Food $400
  Car Maintenance $150
  Entertainment $200
  Clothing $150
  Monthly Savings/Investment $500
  Summer Vacation Fund $500