How to Decide if I’m Ready to Buy a Home?
4 minute read
October 11, 2017


Homeownership is still considered by many to be one of the most important financial and life goals out there. However, it’s not for everyone. At least, you shouldn’t assume that you’re ready to a buy a home just because you feel like it’s “supposed” to be the next step.

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Buying a home is about being ready financially and emotionally. Here’s what you need to know before you decide to take the plunge.

Financial Readiness

First, you want to make sure you are financially ready to buy a home. It’s tempting to buy a home when prices or low, or when mortgage rates are attractive.

However, that doesn’t mean your finances are in the right place to make buying a home practical. Instead, you need to be honest about where you stand right now, and what you can truly afford.

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Look at your debt situation. It’s not the end of the world if you buy a home when you have debt. You don’t want to have a lot of debt, though. One of the best ways to see if you might be financially ready to buy a home is to use what’s called the 28/36 qualifying ratio.

This is a rule of thumb that some banks use to see if you qualify for the best mortgage rates. First, it looks at your mortgage payment. To meet these requirements, your potential mortgage payment should be no more than 28% of your monthly income.

Next, you look at your potential mortgage payment, plus your other debt obligations. All of these together shouldn’t amount to more than 36% of your income.

So, if you make $4,000 a month, your mortgage payment shouldn’t be more than $1,120. All of your debts’ monthly payments together, including the potential mortgage payment, shouldn’t be more than $1,440. You might need to look for a cheaper house, or get rid of some of your debt, to meet these numbers.

Of course, there are lenders who will give you a mortgage if you have more debt and higher ratios. But, just because they will give you the loan doesn’t mean it’s a good idea for your finances. If you have to stretch to afford the home, you might not be financially ready.

Emotional Readiness

The finances are only part of whether or not you’re ready to buy a home. You might be financially ready to take the plunge, but maybe you aren’t ready emotionally.

Look at your lifestyle. How long do you expect to stay in one place? If you think you will move around for a couple more years, you might not be quite ready to buy a home. Any major changes coming up in your life, from a new career to a desire to travel the world, might be signs that it’s not quite the time — even if your finances are all lined up.

Next, look at whether you are ready to take care of a home. Can you keep it clean? Manage the maintenance? Care for the yard? If you aren’t going to do these things yourself, can you afford to have someone else do them?

Taking care of a house is a big responsibility. If you don’t do it, it can lose value and become a problem. You have to be ready to care for the home and all that goes with it.

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It’s important to remember that a home purchase is an emotional, sentimental move. You need to be ready to buy a home from that standpoint as well.

Do you want to start a family and put down roots in the community? If so, you are probably ready to buy a home. Buying a home to live in implies that you want safety and stability and that you want to be involved on a deeper level as part of the local area.

Before you buy, make sure you are ready on the financial and emotional levels. Once you have reached that point, it’s time to start looking for the right place for you.

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