For most people, a home is the most expensive purchase they will ever make. Because homebuyers usually finance their purchase with a mortgage, it is also the largest monthly outgo category in their budget. For those reasons, it is essential to make this purchase with great care and wisdom.
However, a survey of recent homebuyers found that 82% believe they made mistakes, mostly financial mistakes. That’s the overall finding of a survey of 420 Americans who bought a home in 2023 or 2024, conducted by Clever Real Estate (https://listwithclever.com/research/homebuyer-sentiment/). The top regrets of recent homebuyers? Spending too much on the house and being unprepared for maintenance costs.
Spending Too Much
Some 38% of recent homebuyers said they overpaid for the home they bought, and even more say they are generally feeling some financial pain after having made the purchase. More specifically, some 43% say they have struggled to make their mortgage payments on time, 44% say they have had to take on additional debt to maintain their lifestyle, and 47% say they feel in over their heads financially.
The real estate industry typically uses two financial ratios to determine how much of a mortgage you can afford. The first one compares the combination of your monthly mortgage payment, property taxes, and homeowner’s insurance (principal, interest, taxes, and insurance—or PITI) with your income. Typically, lenders want PITI to comprise no more than 28 percent of your monthly gross income. The second ratio adds in all your other debts, such as credit card balances you carry from month to month, vehicle loans, and student loans. Usually, a lender wants your housing costs plus these other debts to require no more than 36 percent of your monthly gross income.
However, if you’re going to live generously and save and invest adequately, it’s generally better to devote no more than 25 percent of your monthly gross income to these housing costs—preferably no more than 20 percent—and have no other debt.
In especially expensive parts of the country, you may need to devote 30 percent of your monthly gross income to housing. Of course, that means you’ll have to spend less in other areas, such as on vacations or entertainment.
Can’t Keep Up with the Upkeep
Another of the most common regrets is “buying a home that requires too much maintenance.” Of course, all homes require maintenance—from lawn care to light bulb replacement, and from appliance repairs to painting. A good rule of thumb is to plan on spending about 1.5% of your home’s purchase price on maintenance and repairs. On a $400,000 house, that comes to $6,000 per year or $500 per month.
Buying a home can be a very emotional process, and there can be pressure to buy. Perhaps others are interested in the same home, and the seller’s agent tells you that offers are coming in.
As difficult as it may feel, it is best to go slow. Take the time to pray over the decision, make sure you and your spouse are in agreement, and know ahead of time how much you can truly afford.
If you make a poor house-buying decision, the house can own you, creating financial stress. However, if you make a good decision, the house will truly become your home.
When you’re ready to learn more about your home loan options, CCCU can help
Matt Bell is the author of Trusted: Preparing Your Kids for a Lifetime of God-Honoring Money Management. He speaks at churches and conferences throughout the country and writes the MattAboutMoney blog.
This article should not be considered legal, tax, or financial advice. You may wish to consult a tax or financial advisor about your individual financial situation.
Still have questions about home-buying regrets? Check out the frequently asked questions below.
Q: How do I know if I’m financially ready to buy a home?
A: A good sign is having enough for a solid down payment. You can put down as little as 3.5%, but 20% helps you avoid PMI and lower long-term costs.
Q: How much of my monthly income should go toward housing?
A: Aim to keep your mortgage, taxes, and insurance at or below 25% of your gross income—and avoid taking on other debt.
Q: What other home costs should I expect?
A: Plan to spend about 1.5% of your home’s purchase price each year on maintenance and repairs.
Q: How can I make a wise home-buying decision?
A: Don’t rush. Pray over the choice, stay aligned with your spouse, and know your budget before making an offer.
Q: Can myCCCU help?
A: Yes! If you’re in the market for a home, contact CCCU about its mortgage options.
