Today’s house prices can make you wonder if now is a good time to buy a house. Paired with high mortgage rates and rising property prices, finding an affordable home can feel like searching for a needle in a haystack. However, if you know where to look, you can discover affordable homes that fit your budget. 

Whether you’re searching for a cheap house in Houston, TX or a fixer-upper in Brooklyn, NY, buying a cheap house requires a combination of strategic planning, thorough research, and leveraging available resources. 

Below are some of the best ways to find an affordable home without breaking the bank.

Key takeaways

Know your budget. Figure out what you can afford and get pre-approved to shop with confidence. Look in the right places. Explore online listings, auctions, foreclosures, and homes sitting on the internet. Stay flexible. Consider different neighborhoods, fixer-uppers, or smaller homes to stretch your budget. Use buyer programs. Take advantage of first-time homebuyer assistance, FHA loans, and grants. Work with a pro. A good real estate agent can spot deals you might miss and help you act fast.

1. Know your budget first

Before you start searching for a cheap house, it’s important to evaluate your financial health and determine how much house you can afford. Review your savings for your down payment, monthly income, and potential loan options to set a realistic price range. Maintaining a low debt-to-income ratio and a strong credit score can also enhance your eligibility for favorable mortgage terms. 

A mortgage pre-approval can give you a clearer picture of your financial standing and help you secure a deal faster. The 28/36 rule is a common mortgage budgeting guideline. It suggests spending no more than 28% of your monthly income towards your mortgage, and no more than 36% toward your mortgage plus debt payments. For example, if you earn $7,000 a month, your maximum mortgage payment should be $1,960.