---
title: How Much House Can You Afford?
description: Your first time applying for a mortgage, house-shopping, obtaining a home inspection - it can get daunting. But none of it is possible until you’ve kicked the process off by determining your budget.
image: https://info.sdhda.org/hubfs/HowMuchHouseCanYouAfford.jpg
---
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Your source for expert information on housing in South Dakota
# How Much House Can You Afford?
****
Your first time applying for a mortgage,[house-shopping](https://info.sdhda.org/blog/the-first-time-homebuyers-guide-to-sioux-falls), obtaining a home inspection - it can get daunting. But none of it is possible until you’ve kicked the process off by determining your budget. Arm yourself with the knowledge you need to feel confident in your decision-making process.
## Set a budget
Don’t start the process until you’ve established your budget – it’s important to know what you’re able to afford before getting too far into the process. Determine the average costs of necessities (i.e., groceries, internet access, etc.) and the cost of your current monthly bills (i.e., car payments, student loan payments, etc.), and account for additional home-specific costs, such as utilities (i.e., electric, gas, garbage disposal, water, etc.) and lawn care- or home maintenance-related expenses.
## Compare youR rent
Depending on your living situation, it’s not outside the realm of possibilities that you could pay a similar amount in monthly mortgage as you do on your monthly rent, but owning a home comes with many [more financial responsibilities](https://info.sdhda.org/6-expenses-that-come-with-owning-a-house-vs.-renting-an-apartment) than renting an apartment – upkeep, additional utilities, taxes, insurance, lawn care and appliance repair and replacement, to name just a few. Keep those in mind when deciding on your maximum monthly payment.
## Fund your downpayment
One of the first steps you should take when you’re about to take the plunge into homeownership is determining how much downpayment you can afford on a house. Many lenders will require a percentage of the purchase price in upfront downpayment. The South Dakota Housing Development Authority (SDHDA) First-Time Homebuyer Program, for example, requires 0-3% of the loan amount, depending on the type of mortgage insurance.
## Check your credit
Your credit score will affect what type of mortgage you can secure. You are entitled to a free credit report from each of the three reporting agencies – Equifax, Experian and TransUnion – once per year. Make sure you know the requirements of your mortgage – does your credit score meet the minimum standards?
Make sure you’ve got your ideal budget in mind once you start the home search – **it’ll help you find a home you want *and* a home you can afford.**
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