Should I Buy a House? How to Tell If You’re Ready

Take an in-depth look at your goals and priorities, as well as your finances, before you begin house hunting.

Buying a house is one of the most significant financial decisions you’ll ever make. But beyond altering your financial picture, buying your first home also represents a substantial lifestyle change for most people. In terms of impact on your day-to-day, homeownership is right up there with finishing school or having a child.

If you’re wondering whether you’re ready to buy a house, here’s a cheat sheet showing what you might factor into the decision. In some cases, all you need to do is run the numbers; others may require some soul searching. Once you’ve gone through this list, you’ll have a better idea of whether you’re ready to buy a house.

You should feel good about buying a house if …

Let’s start with five signs you might be ready to buy. Of course, this isn’t a checklist or a quiz, so it’s not like all five are must-haves. But if these sound like you, you may have already started down the path to homeownership.

You’ve got a steady income

Whether you’re self-employed, work a 9-to-5 or have some combination of the two, you’ve got money regularly coming in. That’s important for obvious reasons, like paying your bills, but also for getting a home loan. Your income is one way mortgage lenders gauge whether you’ll repay the loan. Lack of steady employment or an incomplete employment history may make it harder to qualify for a mortgage. Most mortgage lenders will request documentation showing an employment history of at least two years.

You have solid plans for the immediate future

Buying a house is a commitment; if you decide the place isn’t working out for you, selling a home is much more involved and expensive than, say, breaking an apartment lease. You want a place where you’ll be comfortable now, but also one that could meet your future needs. For example, if you know you want kids, it could make more sense to shop for a three-bedroom now instead of struggling to sell your starter home and upgrade when you’ve got a toddler (or two) underfoot.

You’ve built up savings for a down payment

Saving up for a down payment is one of the biggest hurdles on the path to homeownership. While you don’t have to put down 20%, depending on the type of home loan you’re using, you’ll likely make a down payment that’s between 3% and 10% of the purchase price. There are closing costs to consider, too — those will run about 2% to 5% of the total price. Having savings already socked away puts you much closer to homeownership.

You’re ready to take ownership

Besides paying the mortgage, owning a house comes with a ton of responsibilities. All the stuff you used to lean on your landlord or super for is now your job (unless you pay someone else to do it, in which case it’s yet another expense). So even with a new, move-in-ready home, be realistic about giving up some of your weekends and other free time for home maintenance. One way to skip a bit of the work? Buy a condo instead of a detached house. You’ll have less autonomy, but those homeowners association fees should handle the majority of your maintenance.

You can afford a location that meets your needs

Buying a house because you can afford a house, period, is not the same as buying a place where you actually want to live. If urban homeownership is beyond your budget, but you love your everything’s-in-walking-distance city lifestyle, keep renting for now. Found a town that fits your lifestyle and your bank account? You might be ready to start looking. While you may need to make tradeoffs — for example, compromising on your commute for a better school district — this isn’t just an investment; it’s your home. It’s best to buy in a place that really works for you.

* written by Kate Wood