When it comes to buying a home, “how much can I afford?” isn’t just about what the bank says — it’s about what feels right for your life. A mortgage pre-approval tells you the maximum you could borrow, but your comfort zone should come first. After all, you want a home that brings peace of mind, not financial pressure.
Start with the 28/36 Rule
A popular starting point for gauging affordability is the 28/36 rule:
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28% of your gross monthly income (before taxes) should go toward housing costs — that includes your mortgage, property taxes, and insurance.
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36% should cover all debt combined, including car loans, credit cards, and student loans.
For example, if your household earns $8,000 per month, you’d want to keep your total housing cost near $2,240 (28%) and all monthly debts under $2,880 (36%).
This rule keeps your budget balanced — but it’s just the starting point. In Northern New Jersey, other local factors can shift your numbers.
Local Factors That Affect What You Can Afford
🏠 Property Taxes
Property taxes in Northern NJ vary dramatically by town — and they can have a big impact on your monthly payment.
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Bergen County and Essex County often have higher property tax rates, especially in areas with strong school districts.
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Make sure to plug in the local tax rate when estimating your monthly housing cost — it’s often the biggest surprise for first-time buyers.
Tip: When browsing homes online, look at the annual property tax number and divide it by 12 to see how it affects your monthly budget.
🔧 Insurance & Utilities
Older North Jersey homes may have higher insurance premiums and utility costs due to age, structure type, or heating systems.
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Ask the seller (or your agent) for average monthly utility bills.
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Factor in homeowners insurance and flood insurance if applicable, especially near waterfront or low-lying areas.
It’s easy to underestimate these “hidden” monthly expenses — but planning for them keeps your budget realistic.
🚗 Commuting & Lifestyle Costs
In North Jersey, commuting is often part of the equation. Whether you’re paying for train passes, tolls, parking in the city, or simply extra gas, it adds up quickly.
Also think about lifestyle factors — after-school activities, gym memberships, dining out, or childcare. Your “affordable” number should leave space for the life you actually want to live.
💰 Down Payment & Emergency Reserves
While many buyers can purchase a home with as little as 3–5% down, it’s wise to leave yourself some cushion afterward.
Aim to have 3–6 months of living expenses in reserves after closing. This ensures that an unexpected repair, job change, or medical bill doesn’t create financial stress.
Use Tools — But Test Them Against Real Life
Online affordability calculators can give you a quick ballpark figure, but they can’t capture your full situation.
Ask yourself:
“If a surprise $500 bill hit next month, would my plan still feel comfortable?”
If not, it may be smart to look at a slightly lower price range. The right home isn’t the one that stretches your limits — it’s the one that fits your lifestyle, even on the tougher months.
Home affordability is personal. Northern NJ buyers face unique factors like higher taxes and commuting costs, so a one-size-fits-all approach doesn’t work.
Define a number that lets you enjoy your new home and still live your life — comfortably.
