Affordability means different things to different people.

For economists, it refers primarily to housing stress – when home buyers spend more than 30 per cent of their gross household income on housing costs.

But for first-time buyers, it’s all about spending power.

At its simplest, affordability is the constant juggling between your wants, needs, budget and bank balance. 

The latter, like it or not, will be the biggest single factor in determining the choices available to you.

If you are contemplating taking the leap into homeownership, it pays to be informed.

Even if the bank balance is less than you’d hope, there is never a better time than now to begin your research. This starts with finding out if your financial limits meet aspirational value.

How much is too much?

Familiarise yourself with what you can borrow by using an online loan calculator.

This will give you an estimate of what amount may be borrowed.

Then make an appointment with a lender to learn about types of loans, fees, repayments and government stimulus such as the First Home Owner Grant and HomeBuilder Grant.

Do your sums

If you’re yet to start saving, write down a monthly budget, and stick to it.

This should incorporate all your income and expenditure, paying particular attention to savings, rent, loan and credit card repayments, commitments to food, clothing and holidays, phone and utility expenses, motor vehicle costs and any other incidentals that affect your bottom line. 

Build on savings

When the deposit is gradually taking shape, get the green light for your house hunting from lenders by gaining pre-approval.

This amount, which usually applies for a set time, determines a limit on what you can borrow.

But it allows prospective buyers the chance to put their plans into action. 

Saving requires immense discipline to reach your goal, but it’s worth reminding yourself exactly what your priorities are. 

Besides the sale price, the not-insubstantial matters of stamp duty, settlement and mortgage costs, home insurance, removalist costs and conveyancing are also due, the sum of which can surprise first-time buyers.

Also factor in a contingency fund for emergencies.

Reality brings responsibility

Homeownership can be extremely rewarding, but it brings with it great responsibility. 

If the sums, sentiment and all the boxes are ticked, you could be onto a winner.

But if the emotions and finances don’t balance out, it will pay to steer clear — at least for the time being.

Living it up and home buying aren’t necessarily compatible, but with good planning, it is possible to enjoy the best of both worlds.