When buying a home, it's important to have a budget.

You might be qualified to buy up to $450K but only want to spend $425K based on the associated mortgage payment.

But sometimes, the right house might show up that is a bit above the top of your planned budget.

What to do... what to do...

Usually, I recommend sticking to the budget. But every now and then, it's worth stretching a bit... not with wild abandon... just a bit.

When Stretching Might Make Sense

We talked recently about how there won't be a perfect house. But once in a while, we'll walk into one that gets almost all of the big things right. The location, the lot, the layout, the size. The stuff you can't change later.

If that house is $15K or $20K above where we planned to be, we might want to pause and discuss it further before we dismiss it outright. After all, you could end up spending more than that (in total) over the next few years as you make improvements to a less expensive house that doesn't work quite as well.

Plus, a house that truly fits your life is one you're likely to stay in longer. 

That said, stretching isn't always the best choice. A few counterpoints...

1. Make sure to look at the monthly mortgage payment, not just the purchase price. Planning to buy for $425K and then buying at $440K seems like it's not too much of a stretch... but let's translate that into monthly payment numbers to confirm that conclusions.

2. Don't spend your cushion. If stretching means draining your savings to close on your home purchase, that could be a problem. Homeownership comes with some surprises... a need for a new water heater, a new roof, an HVAC system, etc. You'll want some money left over for those.

3. Don't count on a refinance. Maybe rates will come down and you can refinance into a lower payment. Maybe not. Buy a home whose payment works based on current rates.

4. Be honest about what's coming. A new job, a raise, a growing family, kids heading to college... your next few years should shape how far you're willing to stretch.

So... How Far Is "A Bit"?

I don't think there's one right answer. For some buyers, a bit is $10K. For others, it's an extra $150 a month. The best way to think about it is often... will you still feel (financially) comfortable with this payment in a tight month, budgetarily, not just during a normal month?

If the answer is yes, and the house is a great fit, stretching might be the right call.

If the answer is "I think so, but only if everything goes right"... then maybe we should keep looking.