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Most lenders follow the 28/36 rule: your monthly housing payment (including principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income, and your total debt payments should stay below 36%. For example, on a $75,000 annual salary ($6,250/month), your maximum housing payment would be about $1,750. Enter different home prices into this calculator to find the price range that keeps your payment within this guideline. Remember to factor in property taxes and homeowner's insurance, which vary significantly by location. A home that is "affordable" in a low-tax state may push you over budget in a high-tax area.

Each discount point costs 1% of the loan amount and typically lowers your interest rate by about 0.25%. The key is calculating the break-even period: divide the upfront cost of points by the monthly savings they produce. For a $300,000 loan, one point costs $3,000 and might save you $45 per month, meaning you break even in about 67 months (5.5 years). If you plan to stay in the home longer than the break-even period, buying points saves money over the life of the loan. If you might sell or refinance sooner, skip the points and keep cash available for other needs. Use this calculator to compare scenarios with and without points to see the long-term impact.

Refinancing typically makes financial sense when you can lower your rate by at least 0.5% to 0.75%, you plan to stay in the home long enough to recover closing costs (usually 2% to 5% of the loan amount), and you have sufficient equity. Calculate the break-even point by dividing your total closing costs by the monthly payment savings. Be cautious about refinancing late in your loan term — if you are 20 years into a 30-year mortgage and refinance into a new 30-year loan, you restart the amortization clock and may end up paying more total interest despite the lower rate. Consider refinancing into a shorter term that matches your remaining payoff timeline.

The most effective approach is making extra payments toward your principal. Adding just one additional monthly payment per year can shorten a 30-year mortgage by 4 to 5 years. You can achieve this by dividing your monthly payment by 12 and adding that amount to each payment, or by making biweekly half-payments (which results in 13 full payments per year instead of 12). Apply bonuses, tax refunds, and other windfalls directly to principal. Always confirm with your lender that extra payments are applied to principal reduction, not future payments, and verify there are no prepayment penalties in your loan agreement.

Putting down 20% eliminates PMI, which typically costs 0.5% to 1% of the loan amount annually. On a $300,000 loan, that is $1,500 to $3,000 per year. However, depleting your savings to reach 20% can be risky. Financial advisors recommend maintaining 3 to 6 months of expenses as an emergency fund, plus setting aside 1% to 3% of the home value annually for maintenance. If a 20% down payment would leave you with insufficient reserves, a 10% down payment with PMI might be the smarter choice. PMI can be removed once you reach 20% equity, and the Homeowners Protection Act requires automatic cancellation at 78% loan-to-value.