Here's Why Going Over Budget to Buy Your Dream Home Is a Move You Might Sorely Regret

When you're buying a home, it's important to set a budget ahead of time so you can narrow down your search. And that budget should hinge on several factors, including:

• Your down payment savings
• Your income
• The amount of money a mortgage lender approves you to borrow

But if you're going to set a home-buying budget, you should make a point to actually stick to it. Some soon-to-be buyers might have other plans. 

Almost half of U.S. home buyers say they're willing to go about $50,000 over their budget to buy their dream home in 2024, according to a recent survey by Architectural Digest. But going over budget is a move you might truly end up kicking yourself for.

You don't want to end up house poor

It's easy to see why you may be tempted to go above your budget when buying a home. Let's say you find a suitable home in your preferred neighborhood for $300,000, but you find a home you absolutely adore for $50,000 more. 

You may have told yourself you'd limit your purchase to $300,000. But then you might think, "Hey, this is a home I might live in for the next 30 years, so it's worth the stretch."

The problem, though, is that stretching your budget might lead to a situation where you struggle to keep up with your housing costs, or non-housing costs because your home-related expenses are eating up so much of your money. That's a stressful way to live.

Even if going over budget still technically allows you to keep up with your bills, your paycheck might be gone by the time your essential expenses are covered. From there, you might have no wiggle room to spend money on leisure or other things that make life pleasant.

To put it another way, going over budget on a home purchase increases your risk of becoming house poor. That's not a fun way to live.

You don't want to risk losing your home

Another reason you don't want to go over budget on a home purchase? If you start to fall behind on your housing payments, you could risk losing your home to foreclosure. 

Rest assured that this won't happen after a single missed mortgage payment. But a series of missed payments could lead to you having to say goodbye to the home you fell in love with. 

Set a housing budget and stick to it

It's hard to say no when you're looking at homes and you come across a property that's over budget but fabulous. But if you bust your budget, you might really regret it after the fact. 

To avoid that fate, set a rule that you're only going to look at homes up to a certain listing price. And if you're working with a real estate agent, let them know what the top end of your price range is, and request that they not show you homes that exceed it.

If you're already working with a real estate agent who keeps showing you properties that are beyond what you can comfortably afford, ask them to stop. And if they don't, find someone new to work with.

Remember, your real estate agent gets paid by selling you a home. But you're the one who will be responsible for keeping up with the expenses that come with it. So if you have an agent who likes to push those limits, you may want to seek house-hunting help elsewhere. 

It's hard enough exercising self-control when sticking to a home-buying budget. You don't need the person who's supposed to be helping you leading you into a potentially poor financial situation.