1. Know Your Income and Expenses

The first step in figuring out your home-buying budget is to take a clear look at your finances:

• Income: Consider all sources—salary, bonuses, side gigs.

• Debt: Include student loans, car payments, credit cards.

• Living Expenses: Utilities, groceries, transportation, insurance.

A general rule of thumb is the 28/36 rule:

• Spend no more than 28% of your gross monthly income on housing costs (mortgage, taxes, insurance).

• Keep total debt payments below 36% of your gross monthly income.

This gives lenders a snapshot of what you can comfortably afford.

2. Factor in Down Payment and Closing Costs

In Wisconsin, most lenders prefer a down payment of 3–20% of the home price. A larger down payment can:

• Lower your monthly mortgage payment

• Reduce the need for private mortgage insurance (PMI)

• Potentially get you a better interest rate

Don’t forget closing costs, which can range from 2–5% of the purchase price. These include lender fees, appraisal fees, and title insurance.

3. Don’t Forget Property Taxes and Home Insurance

Property taxes in Wisconsin vary by county:

• Milwaukee County: ~1.7% of the home’s value

• Dane County: ~1.9% of the home’s value

• Rural areas may be lower, around 1–1.5%

Homeowners insurance is another essential cost, typically $800–$2,000 per year, depending on location and coverage. Be sure to include these when calculating your budget.

4. Consider Other Homeownership Costs

Owning a home comes with more than just the mortgage. Include these in your affordability calculation:

• Maintenance and repairs: Budget 1–2% of the home’s value annually

• Utilities: Heat, electricity, water, and internet

• HOA fees: Applicable in some communities

5. Use a Mortgage Calculator

A mortgage calculator can help you see how much home you can afford based on your income, debt, down payment, and loan term. Play around with different scenarios to find a comfortable monthly payment.

6. Don’t Stretch Yourself Too Thin

Just because you qualify for a certain mortgage doesn’t mean you should borrow that much. Consider your lifestyle and financial goals. Ask yourself:

• Can I comfortably cover emergencies?

• Will I still have money for vacations, retirement, or hobbies?

Buying within your means now can save stress later.

7. Work With a Local Wisconsin Loan Officer

A trusted local mortgage lender can help you:

• Understand Wisconsin-specific loan programs

• Calculate your true affordability

• Guide you through pre-approval, interest rates, and down payment options

With the right guidance, you can confidently buy a home that fits your budget—and your lifestyle.

Bottom Line: Knowing how much home you can afford in Wisconsin isn’t just about qualifying for a mortgage. It’s about understanding your finances, factoring in taxes and insurance, and planning for the future. Start with a clear budget, use the tools available, and partner with a local lender to make your Wisconsin homeownership dream a reality.

Kristen Ambos
Ambos Mortgage Team