What is a pretend homeowner? It’s someone who hasn’t bought their first home yet but lives financially as though they have in preparation for homeownership. Doing this gives the pretender a good idea what they’re in for and the chance to find out if they have what it takes.

You might already think you have what it takes. Maybe you’re used to paying bills, buying groceries, and cleaning up for after yourself. But do you really know which expenses you’ll newly be responsible for as a homeowner and how much they’ll cost? Just how much money does your landlord (or your parents) spend on property taxes, repairs, maintenance and so on?

When you pretend to be a homeowner you find out, to the dollar, what kind of money you’ll be spending each month and then practice living with that kind of budget. You’ll work out a balance sheet of income and expenses and live within a pretend budget. For example, if your current living arrangements cost you $3,000 each month but owning a home will bump that up to $4,000 then you’ll have to find a way to set aside $1,000 each month to simulate the experience of homeownership costs.

Step one

Income. Most people have a pretty good idea how much money they make every month. Whether you’re a salaried employee, work for commission, or have some other type of income you’ll need to calculate how much take home you have after taxes and other deductions. If you’re planning on living with a partner and sharing the expenses you’ll need to combine your income.

Be honest with yourself. Don’t bump up your income to make yourself feel better about your chances. And don’t work with numbers you hope to have in the future. Work with what you have RIGHT NOW. If you aren’t exact you’re likely to end up facing disappointment when you apply for a mortgage and get turned down because you don’t make enough. Or worse, if you do get approved, move in, and then realise you really can’t afford it. Set yourself up for success by planning for money you actually have.

Step two

Expenses. You have them, but what are they? Here’s a good list to get you started.

-home insurance
-HOA fees
-property taxes
-utilities (gas, power, sewer, water, garbage removal, etc.)
-consumer debt (car payment, line of credit, credit card, student loan, etc.)
-other home expenses (repairs, emergencies, furnishings, maintenance, etc.)
-consumer expenses (cell phone, groceries, gas, money, life/health/car insurance, savings and all other spending etc.)

This list is not exhaustive. If you have expenses not on this list you’ll need to make sure you include them in your balance sheet and budget. The point is to account for every dollar.


In order to find out how much your future mortgage payment will be you’ll need to get a pre-approval. This application will tell you how much a lender may be willing to give you for a mortgage. Keep in mind that you will not have to use the full amount offered to you. Make sure to pick a payment within your budget and add it to your balance sheet.

Home insurance, HOA fees, property taxes and utilities

If you’re a renter you’re probably already paying for utilities like electricity and maybe gas. When you own your own home these expenses are likely to increase, especially if you’re upsizing. Utilities in a 3 bedroom starter home cost considerably more than a 1 or 2 bedroom apartment. In addition, there will be new expenses you haven’t had to pay for as a renter. As a homeowner you’ll be newly responsible for things like property taxes, sewer and water, garbage removal, HOA fees and so on.

The easiest way to get an accurate idea how much these expenses will cost you as a homeowner is to talk to people you know who own homes similar to what you would like to purchase. In addition you can go to open houses and ask the current owners what bills they pay in relation to the property and how much they have spent on them in the last year. Add these details to your balance sheet.

Consumer debt

Do you already have debt? How much? What are your payments and interest rate? If you don’t know the answer, find out! The more debt you can pay down before you apply for a mortgage the better. You’ll be more likely to get approved for the kind of home you would like to own. Consumer debt includes things like a student loan, credit car, vehicle loan, line of credit, and so on. If you anticipate having this kind of debt when you own a home make sure to add it to your balance sheet.

Other home expenses

The number one regret new millennial homeowners have is that they didn’t realise how much their home was really going to cost them. These other expenses include things like repairs, renovations, emergencies, new furniture, and maintenance. Experts agree that homeowners should plan to spend 1% of the price of their home on upkeep each year. This means if you paid $300,000 for your home you can reasonably expect to spend $3,000 every year on upkeep. If you don’t spend it one year you can plan to spend it another year. Set that money aside for the future. A new lawn mower, replacing the roof, installing a new furnace, repairing a burst water pipe, the possibilities are endless. Some repairs cost more than others.

Consumer expenses

Many of your consumer expenses won’t change after homeownership. You’re probably pretty familiar with how much your cell phone, Netflix subscription, and car payment are each month because they’re always the same. But do you know EXACTLY how much you spend on groceries, gas, and spending money? In order to get an accurate estimation of what your spending will be each month you should track it for 3 or 4 months. Once you know how much money you’re spending, and in which categories, you’ll be able to add it to your balance sheet (and make changes if necessary.)

Your Pretend Balance Sheet

Once you have all your income and expense details put together you’ll be able to see very quickly on paper whether or not your financial habits are sustainable and if you’re ready for the added burden of homeownership. If it looks like you won’t be able to afford it you’ll have to move some things around in order to make it work. That might mean finding a way to make more income, and/or decrease your expenses. Trade in your vehicle for one with a smaller payment. Get a cheaper cell phone plan. Change what kind of food you buy. Decrease retirement contributions or health benefits. Pay off some debt. Choose a home with a smaller mortgage.

The options are only as limited as your imagination. If being a homeowner is your goal then find a way to accomplish it.

Time to play pretend

Once you have all your numbers lined out on paper and it looks like things are gonna work it’s time to start playing the role of a pretend homeowner. This means that you’ll spend your money as though you already have the financial responsibilities of a homeowner. If your current circumstances cost you $3,000 a month but homeownership will cost $4,000 a month you’ll have to set aside the extra $1,000 every month to simulate the experience of paying for your own home. As mentioned above, if you don’t have that extra $1,000 in your budget you’ll have to move some things around to make it work. If you can’t afford to pretend then you definitely can’t afford to do it for real.

You can spend at least 4-6 months as a pretend homeowner and by the end of it you’ll have a solid idea of your capabilities. If you’re scrambling to make ends meet or having to sacrifice essentials in order to put that extra money aside then you’ll know you’re not ready. If living the life of a pretend homeowner is comfortable then you can move forward with confidence knowing that you’ll be able to make it as the real thing!

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