7 Tips on How to Find an Affordable Home

Looking for an affordable home? Finding a dream home that meets your financial needs can be a challenging process. The key to doing so without major stress involves sticking to a clear, specific budget. This is true whether you’re buying your first home or simply moving to a new place.

As you begin searching for a home, these 7 simple tips can help you find one you love at a price you can afford.

1. Know your budget before you start house-hunting

Before you fall in love with any house, it’s important to know what monthly payments you can comfortably afford. Calculate potential monthly payments based on purchase price and mortgage loan terms to figure out what will fit your budget.

 “A realistic budget will help you avoid financial strain and enjoy your new home,” says Christopher Davis, Navy Federal Credit Union’s AVP Business Development, Real Estate Lending. 

A good home-buying rule of thumb is to keep your housing costs under 28% of your monthly income, with total debt payments under 36%. When creating a budget, factor in your other funds, such as retirement savings, emergency savings, medical expenses and travel money.

Once you’ve created a budget, consider applying for a mortgage preapproval. This can help speed up the buying process and show you’re a responsible buyer. 

“Before you begin shopping for homes, you should take the next step of obtaining a mortgage preapproval or verified preapproval,” Davis says. “At Navy Federal, you can start by getting a prequalification to understand how much you can realistically borrow.”

If you’re looking to get preapproved for a mortgage loan, it’s important to calculate your debt-to-income ratio (DTI). Lenders use your DTI to review your mortgage application. This helps them assess whether you’ll be likely to manage your mortgage debt well.

2. Look beyond the home’s listing price

The price upfront isn’t the whole story when it comes to budgeting for a home. Remember to add up additional expenses. In some locations, these necessities could add hundreds of dollars to your monthly housing payments. 

“Factor in not just the mortgage payment, but also property taxes, insurance and potential maintenance costs,” Davis says. “Think about your lifestyle and what features are truly important to you in a home. Prioritize needs over wants to stay within budget.”

You also can expect some upfront costs that you’ll need to be able to cover during the home-buying process. 

“Upfront costs can include a down payment, closing costs, appraisal fees and inspection fees. Even a no-down-payment loan^{Footnote 1} may still require you to pay a deposit when entering into a contract,” Davis says. 

Davis recommends setting up a dedicated savings account for these expenses so you can start saving money.

3. Consider buying a home that needs some sprucing up

Don’t overlook houses that need minor cosmetic updates or repairs. Homes that aren’t move-in ready often cost less and have fewer competing buyers. Consider fixer-upper properties with good bones and systems but possible outdated elements—like kitchens, bathrooms and flooring—that you can improve over time.

Be sure to get estimates for property fixes—don't forget to prepare for the extra spending on the updates and repairs. The property needs to meet the minimum required standards for the loan if you plan to get a mortgage. Compare the cost of required repairs with your savings to ensure you’re ready for the updates.

Older homes might need pricier updates to major systems, like a new roof or HVAC system. Budget for improvements and get a thorough home inspection before buying to help avoid costly surprises.

4. Explore different locations

Being flexible about location can have a big impact on home affordability. Houses in up-and-coming neighborhoods or areas a bit farther from the city center can be a good value. Research nearby communities that might be more budget-friendly while still meeting your needs for safety, schools and amenities. Think about your commute time and access to services you use regularly as well.

“Research typical costs in your area and get estimates from your lender and discuss expectations with your real estate agent,” Davis says.

A knowledgeable real estate agent or military relocation specialist can help you sort through all your housing options, which is especially important if you’re transferring to the area from a different part of the country.

5. Think about the home’s long-term value

The most affordable home for many homebuyers may not be necessarily the one with the lowest price tag. Consider the home’s potential future value as you evaluate your options. Research local market trends and future development plans that might affect property values. Homes in good school districts or growing areas typically hold their value better, even during market downturns. 

For military families who are facing permanent change of station (PCS) moves, think about the potential for reselling or renting out property to tenants if you need to move again later. Your home should continue to feel like an affordable investment even as your situation changes.

6. Take advantage of special programs and loans

Some mortgage options can make homeownership possible without saving for years. Look for loan options with no-down-payment requirements. These may help first-time homebuyers without upfront savings start their homeownership journey. For military members and Veterans, VA loans also offer excellent benefits.

“Active Duty members should consider the impact of potential PCS moves on their homeownership plans,” Davis says. “VA loans offer benefits like no down payment and can be assumable, which can be helpful during a PCS.”

Check if you qualify for down payment assistance programs through state or local agencies. Many of these programs are designed to help qualifying first-time homebuyers find affordable options in challenging markets.

7. Negotiate with home sellers

When you find a home in your price range, look at how long the property has been on the market. Homes that have been listed for more than 30 days may have motivated sellers who are willing to negotiate or compromise. Consider asking for some concessions instead of lowering the asking price in your offer. For example, you might ask for help with closing costs or needed repairs. 

You also might ask for conditions that will protect you financially. For instance, asking for a home sale contingency could reduce your stress and liability if you need to sell your current property before you can commit to buying a new home. 

Work with Navy Federal to find an affordable new home

Finding an affordable home isn’t just about staying within your budget. It’s about creating a comfortable financial future for yourself and your family. Aim to select a home that suits your lifestyle and works with your budget.

We’re here to help every step of the way of your home-buying journey, from creating your budget to applying for the right mortgage. Visit our Home Buying Center to find more resources and start on the path toward affordable homeownership today. 

Navy Federal serves the military community and can help you navigate your unique circumstances, including exploring VA loan options and understanding the implications of PCS orders on your mortgage. We can also help connect you with experienced real estate agents through our RealtyPlus program.^{Footnote 2}