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Most first-time buyers have never experienced the costs associated with owning and maintaining a home and, for the most part, referring to mortgage amounts and numbers in the $300,000 to $400,000+ range can be a little intimidating and frightening. Of course, outside of your housing costs and potential other monthly liabilities (e.g., vehicle loan, student loan, credit cards), you also need to budget for day-to-day living expenses such as food, transportation, insurance, gas, clothing, entertainment, and savings.

Set up a budget that includes all of your anticipated living expenses in advance. Factor in what you expect to pay each month for mortgage, taxes, utilities, monthly strata or condominium/maintenance fees where applicable, and all other anticipated living expenses. Try using your budget for a few months.

You can use Worksheet 1 to help you create a monthly budget. This way you will be able to track your spending and determine, prior to committing to a certain mortgage amount, how comfortable you will be. It will also enable you to decide if there are expenses or items that can be eliminated to reduce your spending (e.g., entertainment or travel).

It is not recommended that you become “house poor” and max out on credit cards or loans in order to make your monthly debt commitments — this is neither healthy nor fiscally responsible. Owning a home and building equity is a long-term plan that requires discipline and sacrifice. However, the long-term results are future security and building net worth. Many buyers decide to purchase for less than their maximum pre-qualification amount; they build in a “cushion” for unexpected expenses or life in general. This conservative approach is certainly something to consider. Remember: Short-term pain (and discipline) fosters long-term gain.