Is it ok to go over budget?

When does it make sense to go over-budget?

Know your budget and stick to it! Great advice but do you really have to listen to it? YES, well no, but yes.

Being house poor (just barely paying the bills because your home is too expensive) is no fun, although many people make it work. But if you go so far over budget that you end up defaulting on your loan, that can lead to a lifetime of financial problems and that is never an acceptable risk.

The only feature worth going over budget is location. Nearly everything else can be changed in a home.

How to make over-budget work

Consider adding a renter. The lot may have room for an ADU. Or if you have no kids, you might even consider a roommate.

You might be ok going over-budget if you plan to own for a long time or a very short time. If you are early in your career and see a consistent path forward for higher income, you could go over-budget now, get a roommate to cover costs and then in a few years maybe you are making enough that you can afford the home without a renter.

On the flip-side, if you plan to sell within a few years and have the chance to get a great house that is likely to increase in value. Look into interest only loans, if the math works it could be a great investment.

Remember that over-budget requires taking on more risk, so please consult professionals before you sign, your realtor, your tax accountant etc.