Buying a house is one of the biggest financial decisions you’ll ever make. This holds true no matter if you’re buying your first home, second home, or fifth home. Every time you make a purchase of this magnitude it has an impact on your current and future finances.

As fun as it may be to search for and buy a new home, there’s something to strongly consider: it’s easy to overspend, which can put you in a difficult financial spot in the near future.

Fortunately, there are steps you can take to avoid buying a house you can’t afford. Here’s what you should do:

1. Review Your Budget

This is step number one, as it gives you a clear idea of how much money you earn and how much money you spend each month. From there, you can decide what you can afford for housing.

Keep in mind that your budget today may not be the same as your budget in the future. So, don’t max out your spending, as you never know when your situation could change down the road.

2. Crunch the Numbers

During this step, you begin to formulate a path forward. Crunch all the numbers — with a focus on your income, expenses, and mortgage related details — to ensure that you’re 100 percent confident in where you’re heading.

There’s nothing wrong with getting help at this stage — such as through a financial planner or mortgage broker — but you don’t want them to tell you what to do. You simply want them to provide guidance along the way. Don’t be surprised if they suggest something that doesn’t work for your budget.

3. Obtain a Mortgage Pre-Approval

This goes along with the step above. You can obtain a pre-approval through a lender or broker. Either way, it gives you a better idea of how much you’re eligible to borrow. With that number, you’re inching closer to pinning down your budget.

It’s worth noting again that just because you’re pre-approved for a specific amount of money doesn’t mean you have to borrow that much. For example, if you’re told you can borrow $300k but are only comfortable with $250k, don’t push your limits.

These are the types of things you can do to avoid buying a house you can’t afford. You want to enjoy your new home, so biting off more than you can chew is something you must avoid.

How do you feel about your current mortgage payment? Does it fit nicely into your budget, or did you overspend?