How Much Home Can You Afford in the Seattle Area?

Start With Your Budget Before You Start Your Home Search

Buying a home in the Seattle area can require careful financial planning.

Home prices can vary considerably depending on the neighborhood, property type and location, and the purchase price is only one part of determining whether a home fits your budget.

Your mortgage payment, property taxes, homeowners insurance, HOA dues when applicable, down payment, closing costs and ongoing homeownership expenses can all affect affordability.

Why Affordability Matters in the Seattle Area

Seattle-area buyers often have to balance the cost of housing with the features and location that matter most to them.

A buyer may discover that changing the neighborhood, property type, down payment or price range can significantly change the available choices.

For example, a condominium may have a lower purchase price than some single-family homes but include monthly HOA dues. A property farther from the city may offer a different price point but introduce commuting or transportation considerations.

There isn't one affordability number that works for everyone. The goal is to understand the complete financial picture and establish a home-buying range that fits your priorities as well as your finances.

Start With a Mortgage Pre-Approval

Before seriously shopping for a home, consider reviewing your financing and obtaining a mortgage pre-approval.

A mortgage professional can review your income, assets, credit, debts and other financial information to help determine which financing options may be available and what loan amount you may qualify for.

A pre-approval can also help you better understand:

• Your potential home-buying price range
• Estimated monthly principal and interest
• Down-payment requirements
• Available mortgage programs
• Estimated property taxes and insurance
• Mortgage insurance, when applicable
• HOA dues, when applicable
• Estimated funds needed for closing

A pre-approval is not a guarantee of final loan approval. Final approval generally depends on updated borrower information, the property, appraisal when applicable, underwriting and lender requirements.

Look Beyond the Purchase Price

It's easy to begin a home search with a target purchase price. But the price of the home alone doesn't tell you what owning it may cost each month.

Your monthly housing expense may include:

You may also want to consider utilities, maintenance, repairs and other costs of homeownership when establishing your personal budget.

How Much Should You Put Down?

You don't necessarily need a 20% down payment to purchase a home.

Depending on your qualifications, the property and the loan program, financing may be available with a smaller down payment. The amount you put down can affect your:

• Loan amount
• Monthly payment
• Available loan programs
• Mortgage insurance
• Financing terms
• Cash remaining after closing

In a higher-cost housing market, keeping adequate savings after closing may also be an important consideration.

Rather than assuming that a particular down payment is best, it can be helpful to compare several financing scenarios.

Plan for Closing Costs

Your down payment isn't the only cash you may need to purchase a home.

Depending on the transaction, closing costs and prepaid expenses may include lender charges, appraisal costs, title and escrow charges, homeowners insurance, property taxes and prepaid interest. Understanding these potential expenses early can help you develop a more complete home-buying budget.

Be Prepared for Earnest Money

When you make an offer on a home, the purchase agreement may call for an earnest-money deposit.

The amount, timing and terms associated with earnest money can vary depending on the transaction and the purchase agreement. Your real estate broker can help you understand these provisions before an offer is submitted.

Your Home Search Can Affect Affordability Too

Financing is only one side of the affordability equation.

If the homes you're considering don't fit comfortably within your budget, there may be other ways to approach your search. Depending on your priorities, you might consider:

• A different Seattle-area neighborhood
• A condominium or townhome instead of a single-family home
• A different home size
• A property that may need some updating
• Expanding your geographic search
• Adjusting your price range

The right approach depends on what matters most to you. This is where coordinating your home search and financing strategy can be particularly helpful.

Ready for a Personalized Mortgage Review?

Online calculators are useful for initial planning, but they can't evaluate your complete financial situation or compare the financing options that may be available to you.

A personalized mortgage review can help you compare different purchase prices, down-payment amounts and financing approaches before you begin seriously shopping for a home.