How much house you can afford in Florida depends on your income, your monthly debts, your savings and the full monthly cost of the home, not just the loan payment. In Florida, insurance, property taxes and HOA or condo dues can make up a big share of that monthly cost, so two homes at the same price can have very different budgets. The best starting point is to add up the full payment, compare it to what you are comfortable spending each month, and then talk with a lender about what you qualify for.
Qualifying and being comfortable are not always the same number. A lender tells you the most you may be approved for. Only you can decide what feels right for your life.
What goes into a Florida housing payment
When people ask what a home will cost each month, they usually think of principal and interest. In Florida, that is only part of the picture. A typical payment can include:
- Principal and interest on the loan
- Property taxes, usually collected monthly through escrow
- Homeowners insurance, including wind coverage
- Flood insurance, required in high-risk flood zones for most mortgages and optional elsewhere
- Mortgage insurance, common with smaller down payments
- HOA or condo association dues, which are paid separately but still count in your budget
Insurance deserves special attention along the coast. Premiums can vary widely based on the home’s age, roof, construction and location. Getting a quote early gives you a far more accurate number than a guess. Our mortgage calculator lets you add taxes and insurance so you can see the full payment.
How lenders look at affordability
Lenders mostly focus on your debt to income ratio, often called DTI. They compare your monthly debts, including the new housing payment, to your gross monthly income. Each loan program has its own limits, and a lender may allow more or less depending on your credit, savings and the rest of your file.
Debts that usually count include:
- Car loans and leases
- Student loans, even if they are deferred, depending on the program
- Minimum credit card payments
- Personal loans and other installment debts
- Child support or alimony you pay
Everyday costs like groceries, utilities, phone bills and childcare usually are not part of DTI, but they are very much part of your real budget. Our guide to debt to income ratio for Florida home buyers walks through the math in more detail.
Rules of thumb and their limits
You may have heard simple rules that tie your housing payment to a fixed share of your income. They can be a useful gut check, but they were never meant to fit everyone. A household with no car payment and solid savings may be comfortable with a higher payment than a household juggling several debts. And a rule of thumb does not know what your insurance quote will be.
A better approach is to build your own budget:
- Start with your take home pay, not your gross income.
- Subtract your current debts and regular expenses.
- Set aside money for savings, retirement and emergencies.
- See what is left for housing, and leave room for maintenance and repairs.
Cash you need beyond the down payment
Affordability is also about cash. Even with a low down payment program, you will usually need money for:
- Closing costs, including lender, title and government charges
- Prepaid items, such as the first year of homeowners insurance and an initial escrow deposit
- Inspections and appraisal, often paid before closing
- Reserves, which some programs require and which are smart to have anyway
- Moving and setup costs, from utilities to window coverings
Down payment and closing cost assistance programs may be available for some buyers, and seller concessions can sometimes help. Requirements vary, and a lender will review what fits your situation.
Steps to find your number
- Check your credit and fix any errors before you apply.
- Gather your documents: pay stubs, W-2s or tax returns, and bank statements.
- Get an insurance estimate for the type of home and area you want.
- Run a few payment scenarios at different prices.
- Talk with a loan officer about a preapproval, so your search starts with a real number.
Our article on what to do before touring homes covers the preapproval step.
Frequently asked questions
Does a preapproval tell me how much I should spend?
A preapproval shows the loan amount you may qualify for based on the information reviewed. It does not know your full lifestyle budget. Many buyers choose to shop below their maximum to leave breathing room.
Why does insurance matter so much in Florida affordability?
Homeowners, wind and flood coverage can be a large part of the monthly payment in coastal areas, and premiums vary a lot from home to home. A high insurance quote can change what price range makes sense.
Do HOA dues count when a lender figures what I can afford?
Yes. Lenders generally include HOA or condo dues in your housing expense when calculating your debt to income ratio.
Can I afford more if I pay off debt first?
Paying down monthly debts can improve your debt to income ratio, which may increase what you qualify for. It is worth asking a loan officer which debts to focus on before you use savings, since you still need cash to close.
If you want help finding a comfortable number, Michael Akialis is happy to sit down with you at our Flagler Beach office or talk by phone. Read more about Michael, browse more Florida mortgage guidance, or call (386) 793-5435.
Mortgage information is for educational purposes only and is not a commitment to lend or extend credit. All loans are subject to credit approval, property approval, underwriting guidelines, program eligibility, and availability. Program rules, rates, fees, and requirements can change. Michael Akialis, NMLS #832250; American Home Mortgage Group LLC, NMLS #1812447.