Service 06 — Fee-Only · Fiduciary · Minnesota

Home Purchases

Affordability analysis, mortgage strategy, and how a home purchase fits into your broader financial picture.

28%
traditional housing affordability
threshold as % of gross income
01 Investments02 Retirement03 Tax Planning04 Insurance05 College Savings06 Home Purchase07 Emergency Fund08 Budgeting09 Other Goals
Planning PrincipleEvery dollar coming into your account has a purpose. A mortgage is one of the largest commitments that dollar will ever make.
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The Real Analysis

Lenders approve you for the maximum they'll lend. That number is almost always higher than what makes sense.

We run the numbers before the offer. What does this mortgage payment do to your savings rate? Your retirement trajectory? What happens if rates rise or income drops? A home that fits your life looks different from a home that fits your approval letter.

True Cost of Homeownership
Principal and interest payment
Property taxes (1–2% of value/yr)
Homeowners insurance
PMI if down payment below 20%
Maintenance reserve (~1% of value/yr)
What We Analyze
Down payment impact on portfolio
Monthly payment vs. current rent
Buy vs. rent break-even horizon
Effect on savings rate and retirement
Stress test at +1% rate scenario
Monthly P&I Payment by Home Price and Down Payment
30-year fixed at 7.0% · principal + interest only
Buy vs. RentThe honest math — it depends on your timeline, not conventional wisdom
Cumulative Cost: Buying vs. Renting
$350K home, 20% down, 7% mortgage · vs. $1,800/month rent at 3% annual increase

Buying is not always better than renting. The break-even point — the year total buying costs fall below total renting costs — depends on price appreciation, transaction costs, and how long you stay.

If you plan to move within 3–5 years, renting is almost always cheaper once transaction costs are factored in. If you're staying 7+ years in a market with reasonable appreciation, buying usually wins.

The 5% Rule
Multiply home price by 5%, divide by 12. If that number exceeds comparable rent, renting may be cheaper on an unlevered basis. The 5% represents ~3% for taxes, maintenance, and HOA, plus ~2% cost of capital on the down payment.

Ready to get started?

A free 30-minute consultation. No sales pitch. Just an honest conversation about your finances.

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