It’s a line that Bernadette Joy, author of “Crush Your Money Goals,” has heard before. The self-made millionaire<\/a> and financial coach gets pushback whenever she cautions against homeownership for homeownership’s sake<\/a>.<\/p>\n “My favorite thing is to challenge people and say, ‘Show me your amortization table,'” she says. “Show me how much equity you’ve really built.”<\/p>\n Over the first several years of your mortgage, Joy points out, much of your payment goes toward interest rather than the principal. If you’re in a 30-year mortgage, she says, you may find yourself a half a decade in with little equity to show for it, which is why she typically recommends an alternative for clients.<\/p>\n “If you’re going to buy a home, buy it on a 15-year mortgage, because at least you’ll build equity much faster that way,” she says. “If you can’t afford a 15-year mortgage, you can’t really afford the home.”<\/p>\n Buying a house you can afford<\/p>\n If you’re currently renting and playing around with mortgage calculators, you may think you could own a home for roughly what you’re paying in rent \u2014 even if you’re factoring in some of the prominent costs of homeownership, such as property taxes and home insurance.<\/p>\n But homeownership comes with other hidden costs<\/a>, Joy says. And going in unprepared could leave you in a precarious financial situation.<\/p>\n Help us help you:\u00a0Take our survey on work, money and life goals<\/a><\/p>\n “I have very rarely come across a coaching client that said, ‘You know what, let me actually do the proper math of what I can truly afford on a mortgage,'” she says. “And so what I’m finding with that, is that most people are buying more house than they can actually, practically afford.”<\/p>\n Here are a few things to consider in your calculations.<\/p>\n A pricier mortgage<\/p>\n Joy prefers a 15-year mortgage because you can build equity faster, with more flexibility. Though you’ll eventually start paying down the principal on a 30-year mortgage, it’s a long time to wait, she says.<\/p>\n “How likely is it that you’ll see the [30-year] mortgage through to the bitter end, without selling or refinancing (and starting the clock all over again)?” she wrote in a recent article for Bankrate<\/a>.<\/p>\n Of course, a shorter mortgage comes at a steeper price. Buy a $435,300 home \u2014 the median price according to the National Association of Realtors<\/a> \u2014 with a 20% down payment, and you’re looking at a monthly payment of about $2,500 on a 30-year mortgage, according to Bankrate’s calculator<\/a>. Bump the loan down to 15 years, and your bill rises to nearly $3,400 a month.<\/p>\n The cost of sizing up<\/p>\n No matter which kind of mortgage you choose, a new home is likely going to be a step up in space over what you were renting, says Joy \u2014 and that comes with an increase in costs. For one, you’ll have more rooms to furnish. And since you own the place, you’re probably not going to want to go cheap.<\/p>\n “When I sit down with clients, I say, let’s look at the cost of outfitting this home the way you want it to look,” she says. “People don’t want to furnish their new home with IKEA. They’re going to West Elm.”<\/p>\n Expect to pay more in utilities too, she says, since you have more space to heat and cool. And if you left your city apartment for the house out in the burbs, Joy recommends factoring a longer commute into your budget as well.<\/p>\n Maintenance and other headaches<\/p>\n “You have to budget a certain amount every year for repairs, because that’s just going to be the case,” Joy says.<\/p>\n Homeowners pay an average of $8,808 in annual maintenance costs, according to a recent Bankrate survey<\/a>. If you don’t have the cash to pay for a fallen tree or a new washing machine or one of the million other things that could come up, you may find yourself making some tough decisions.<\/p>\n “What I see happen to a lot of my clients is, they buy the home and things are good until something breaks,” she says. “Then they get into credit card debt, or they are having to significantly sacrifice other places in their lifestyle in order to accommodate those things.”<\/p>\n Know your numbers<\/p>\n Overall, Joy recommends a 50-25-25<\/a> approach to budgeting, with 50% of your income going toward living expenses, 25% going toward growing your wealth and the remainder on things you enjoy.<\/p>\n If, after accounting for all the costs, buying a home would put your living expenses over that 50% threshold “the math isn’t mathing,” Joy says.<\/p>\n And even if it is within your budget, make sure that you have enough for an emergency fund, too.<\/p>\n “If you’ve been someone who has not been able to maintain a level of three months’ worth of expenses sitting inside a high yield savings account,” Joy says, “then you’re not ready to buy a home.”<\/p>\n Want to stand out, grow your network, and get more job opportunities?\u00a0Sign up for Smarter by CNBC Make It’s new online course,\u00a0How to Build a Standout Personal Brand: Online, In Person, and At Work<\/a>. Learn how to showcase your skills, build a stellar reputation, and create a digital presence that AI can’t replicate. Sign up today with coupon code EARLYBIRD for an introductory discount of 30% off the regular course price of $67 (plus tax). Offer valid July 22, 2025, through September 2, 2025.<\/p>\n Plus, sign up for CNBC Make It’s newsletter<\/a> to get tips and tricks for success at work, with money and in life, and request to join our exclusive community on LinkedIn<\/a> to connect with experts and peers.<\/p>\n![\"I](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2025\/09\/108183667-1754670562910-250804-mg-31-mm-corey-retell-thumb-3-clean.jpg\")
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