The Hidden Truth About Home Affordability for First-Time Buyers

The Hidden Truth About Home Affordability for First-Time Buyers

By Julie Marion, The First Time Homebuyer Workshop.

Today, we’re tackling one of the most important (and overlooked) aspects of buying your first home: affordability.

Buying your first home is exciting—but it can also be overwhelming. The biggest mistake new buyers make? Thinking affordability is only about the monthly mortgage payment. In reality, affordability is a much bigger picture, and misunderstanding it is one of the top reasons over 50% of first-time homebuyers experience regret after moving in.

Let’s make sure you’re in the 32% of buyers who avoid homebuyer remorse.

🔑 What Affordability Really Means

When lenders give you a mortgage estimate, they may include property taxes and insurance—but if you’re using an online lender or a big out-of-state bank, those estimates are often way off. On top of that, real costs of homeownership—like heating bills, property taxes, and insurance—can rise dramatically each year.

I’ve seen heating costs quadruple in three years and property taxes double in less than a decade. Those hidden increases are what "push" people into becoming “house poor”—where you own the house, but feel financially trapped.

💡 Gross vs. Net Income: A Reality Check

HUD suggests your housing costs shouldn’t exceed 30% of your income. But here’s the catch: lenders calculate that based on your gross income—not the money you actually take home after taxes, retirement contributions, and insurance.

That “affordable” mortgage can suddenly feel very tight when you look at your net income.

👉 The key is to base your budget on a blend of gross and net income—not just one or the other.

🧮 The Big Picture: Taxes & Amortization

Two often-overlooked factors:

1. Tax Advantages – You most likely will be able to deduct your mortgage interest, which lowers your taxable income.

2. Amortization Schedules – Understanding how much of your payment goes toward interest vs. principal helps you forecast the real monthly benefit.

This step requires running hypothetical tax scenarios. Most mortgage brokers won’t do this for you—it’s on you to be financially prepared.

🚀 Long-Term Affordability: The Forecasted Budget

Affordability doesn’t end when you get approved. The goal is to make sure your home stays affordable over time.

That’s where a forecasted budget comes in. A forecasted budget accounts for ongoing expenses—repairs, furnishings, appliances, property taxes, and more.

In fact, the Wall Street Journal reports that many new homeowners face $2,000 to $10,000 in repair bills within the first year of ownership.

📈 3 Costs Most Buyers Underestimate

Here are three affordability variables that almost always rise in cost:

1. Property Taxes

• Often glossed over during the buying process.

• Taxes usually increase when local governments fund schools or infrastructure projects.

• Many jurisdictions reassess property values every 3–10 years, which can mean a sudden jump in your bill.

• Property taxes can realistically double within 10 years.

2. Homeowners Insurance

• Premiums are rising due to inflation, labor shortages, and climate risks.

• Disaster-prone areas (Florida, California, coastal states and even the mid-west with the tornados) see the steepest hikes—sometimes 30% in just two years.

• Rebuilding costs rose 9.3% in 2022 alone, driving premiums even higher.

3. Maintenance & Repairs

• According to the National Association of Home Inspectors, 40% of buyers discover major issues after moving in.

• Think HVAC systems, roofing, wiring, plumbing—expenses that can’t be ignored.

• Even newer homes can surprise you with hidden costs.

😬 Why You Don’t Hear About This From the “Pros”

Real estate agents, mortgage brokers, and transactional professionals are paid to close deals—not to prepare you for the long-term financial reality. They’re often not incentivized (or qualified) to break down future costs, leaving you to figure it out later.

That’s why education is your best protection.

✅ Homework for Future Buyers

• Follow the Federal Reserve: Their reports on inflation and interest rates directly affect mortgage costs.

• Run your own affordability math: Blend gross and net income, factor in tax benefits, and build a forecasted budget.

• Don’t rush: The best buyers are informed buyers.

🎓 Take the Next Step

By planning ahead and learning what affordability really means, you’ll avoid costly mistakes and put yourself in the 32% of first-time buyers who feel confident—not regretful—after buying a home.

👉 Want a head start? Check out our free mini-class, Homebuying Chaos Unwrapped , and take control of your homebuying journey.

You’re the CEO of your home purchase. The knowledge you gain now will save you money—and stress—for years to come.

Prevent Homebuyer Remorse Before It Begins

Grasping the details of your mortgage and utilizing tools like amortization schedules empowers you to take control of your finances and future. If you're contemplating homeownership, begin your education and.....

Join Us!

• Access free resources, including our mini-class “Homebuying Chaos Unwrapped!” Let’s make your homeownership dream a reality—without the regret!
• Jump into The First Time Homebuyer Workshop and leave homebuyer remorse in the dust!

By learning now, you can avoid future regrets and ensure your first home is one of your most rewarding investments.

Disclaimer: This content is intended to educate first time homebuyers and let you know there are options. Discussing the issues with the professionals you hire during your home buying journey is prudent. We are not recommending or advising you on your financial or legal situation

Let’s demolish homebuyer remorse together—one empowered buyer at a time.

 Julie Marion 

Founder of The First Time Homebuyer Workshop, homebuyer educator, Urban Planner, Freddie Mac Credit Counselor, Real Estate Broker, Podcast Host, You Tube Contributor.

www.TheFirstTimeHomebuyerWorkshop.com

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•  What is a way to review affordability? A good rule of thumb is to run an analysis of a home's affordability and your gross income and your net income.  If you do not do this then the mortgage may be too tight financially on just a gross income qualification.

• How can first-time homebuyers save money on their mortgage? First-time homebuyers have many ways to save on their mortgage but, an overall financial plan should be put in place when you buy a home.  It's not just one financial aspect to consider - there are many to think about.

• Does making extra payments reduce interest? Yes however, you must be in a loan type that allows extra payments and make the payment correctly so you get a benefit.