How much home can you afford?

How Much Should You Pay For a New Home?

Editor’s Note: This new series on Financial Fitness comes from personal finance expert, and SoFi content partner, Dr. Tony Pennells, founder of, Using proven tools and systems, Dr. Tony demystifies “financial freedom” with common sense solutions to help people create true wealth (the type that makes money that you don’t have to work for!). Click here for earlier stories in the series.

How much should you pay for housing? This is a great question. We’re expected to own a home. If you haven’t been told this directly, you’ve probably felt the pressure over the years, because the idea that a home is a good financial investment is ingrained in our culture. And that’s fine. Owning a home can be a good thing. But not always.

People buy the best home they can afford. That used to mean the best home for the money you had saved and allocated. Today “the best home you can afford” means the home you can buy with the maximum loan the bank will give you.

Related: How Good Is Your Financial Health Right Now?

But of course, the choices you make today affect your financial freedom for tomorrow.

When you approach home ownership focusing on the size and amenities of the property rather than what you should realistically pay each month, you will most certainly experience a setback to your financial freedom. The average person that comes to is paying 40 – 50% of their take-home pay to interest payments—mostly around their mortgage. So a purchase that was intended to be a positive financial decision quickly becomes just one more roadblock on your path to financial wellness.

Recommended: The Realtor’s Guide To Getting Your Dream Home

How do you know if you’re spending too much on your mortgage? Or if owning a home is getting in the way of your financial fitness? Watch the video below and find out.

Dr. Tony

Editor’s Note: This article originally appeared on our web partner’s site,

More From Dr. Tony:

How To Cure Money Stress Ebook

Blueprint to Financial Freedom


ABOUT Tony Pennells Dr. Tony Pennells – founder of The Freedom Club; soon to be – teaches people how to cure their money stress, get out of debt and get on the road to financial security. He is the best-selling author of 3 books, has spoken to audiences as large as 13,000, and has built several businesses recognised as some of the fastest 100 growing companies in Australia by Business Review Weekly.

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