How to Know You’re Ready to Buy a Home

Buying a home is a big decision, and knowing when you're truly ready can feel overwhelming. While there’s no one-size-fits-all answer, there are several key indicators that signal you might be prepared to take the next step toward homeownership. If you’re wondering whether now is the right time, here are five factors to consider.

1. You Have a Stable Income

A steady and reliable income is one of the most important factors when considering homeownership. Lenders typically look for at least two years of consistent employment in the same field or industry. If you have:

• A dependable job or consistent income source
• Confidence in your financial future
• A budget that comfortably supports housing costs

…you might be in a good position to buy a home.

2. You’ve Saved for a Down Payment and Closing Costs

Contrary to popular belief, a 20 percent down payment isn’t always required. Many first-time homebuyer programs allow for as little as 3 to 5 percent down, but additional costs, such as closing fees and moving expenses, should also be factored in.

What to Budget For:

• Down Payment – Typically 3 to 20 percent of the home price, depending on the loan type
• Closing Costs – Generally 2 to 5 percent of the loan amount, covering fees like title insurance and inspections
• Moving & Maintenance – Initial costs for furniture, home repairs, or unexpected expenses

3. Your Credit Score is in Good Shape

Your credit score plays a significant role in determining the mortgage rates available to you. While some lenders accept scores as low as 620, a higher score (typically 700 or above) can help secure a better interest rate, reducing your monthly payments.

How to Check If Your Credit is Mortgage-Ready:

• Your credit score is at least 620 (higher is better)
• You have a history of on-time payments
• Your debt balances are manageable compared to your credit limits

If your score needs improvement, paying down debts and avoiding new credit inquiries can help strengthen your financial position before applying for a mortgage.

4. Your Debt is Under Control

Lenders evaluate your debt-to-income ratio (DTI) to determine if you can afford a mortgage. This ratio compares your total monthly debt payments to your gross income.

• Most lenders prefer a DTI below 43 percent
• A lower DTI means more flexibility in your homebuying budget

Reducing debt before purchasing a home can improve your loan options and ensure financial stability once you become a homeowner.

5. You’re Ready for the Responsibilities of Homeownership

Unlike renting, owning a home means taking on maintenance, property taxes, and long-term commitments. Before buying, consider:

• How long do you plan to stay in the area? Buying makes the most financial sense if you plan to stay at least three to five years
• Are you prepared for home maintenance? Unexpected repairs and routine upkeep come with the territory of homeownership
• Have you researched neighborhoods? Choosing the right location is just as important as finding the right home

Final Thoughts

Deciding whether you’re ready to buy a home involves more than just finances—it’s about stability, future goals, and personal readiness. If you find yourself checking most of these boxes, homeownership could be the right next step for you.