For those looking for their first home in Orlando, calculating home prices along with mortgage interest can be quite overwhelming these days.

Just looking at the home price and thinking, "$380,000 might be worth considering?" can change when you actually calculate the monthly payment. However, by breaking down the numbers, you can get a sense of how much you need to prepare.

The average home price in Orlando can be thought of as being in the high $300,000 range. The home value indicators from Zillow and actual sale prices differ slightly due to different aggregation methods, but let's assume we're looking at a $385,000 home.

If you put down 20%, the initial amount needed would be $77,000. That's not a small sum. This leaves a loan amount of $308,000. Assuming a fixed mortgage rate of 6.75% for 30 years, the principal and interest would be about $1,998 per month.

But that's not the end of it. Those who have bought homes know that you can't just pay the mortgage. There are property taxes and homeowners insurance as well. Assuming property taxes are about $481 per month and insurance is around $150 per month, the total monthly housing cost would be approximately $2,629. If the home has an HOA, that amount would increase.

So, how much do you need to earn to afford this home?

One commonly used calculation method is to consider housing-related costs to be about 28% of your gross monthly income. If you reverse-calculate $2,629 at 28%, it results in a monthly income of about $9,390, which translates to an annual income of about $112,700.

In simple terms, for a household with relatively low other debts to purchase a $385,000 home in Orlando without overextending themselves, an annual household income of around $110,000 would be necessary. If both partners earn about $55,000 to $60,000 each, that becomes a realistically attainable range.

However, you shouldn't interpret this as meaning "you can't buy a house if your salary is below $110,000." Actual bank loan assessments depend on factors like car payments, student loans, credit card debt, credit scores, and down payments. The 28% figure is merely a conservative budgeting guideline.

Putting down 20% is not mandatory. First-time homebuyers might consider FHA loans or conventional mortgages with lower down payments. The issue is that while a lower down payment reduces the immediate cash needed, it increases the loan amount, and in some cases, mortgage insurance may be required, which can raise the monthly burden.

Additionally, in Florida, you should never underestimate insurance. Depending on the home's location, age, and roof condition, insurance premiums can vary significantly, so you shouldn't rely solely on the $150 figure when deciding on a home. The same goes for homes with HOA fees of $200 to $300 per month.

However, a positive aspect for those searching for their first home in Orlando these days is that the market has shifted from a frenzy where buyers rushed to bid up prices. There is now room for negotiation on price adjustments, seller credits, and closing cost assistance depending on the property.

Therefore, I would recommend that instead of rushing to view homes, you first get pre-approved by a bank or mortgage broker. You need to know whether you are comfortable with a budget of $350,000 or if you can stretch to $400,000.

When it comes to your first home, what others have purchased is not the most important factor. You should still have some flexibility for dining out or traveling after the purchase. If you're considering a $385,000 home in Orlando, use an annual income of around $110,000 as a benchmark, and after calculating down payments, insurance, taxes, and HOA fees, take your time in making a decision.