How to Know If You’re Ready to Buy Your First Home

Buying your first home is exciting, but it can also feel overwhelming. With high home prices, low inventory, and rising mortgage rates, today’s housing market can be tough. These challenges make it more important than ever to know if you're truly ready to buy. If you jump in too fast, you could miss out on your dream home or you could end up with a house you can’t actually afford.

Here are a few tips to help you figure out if you're truly ready to buy your first home:
 

1.  Evaluate Your Financial Readiness

Before you start looking at homes, take a close look at your finances. Here are the important things to check:

• Your Credit Score Health. Your credit score plays a big role in getting approved for a mortgage. It also affects the interest rate you’ll pay. A higher score usually means a lower rate, which can save you thousands over time. Most lenders want to see a score of at least 620, but the higher your score, the better. If your score is low, consider improving it before applying for a loan.
• Your Savings & Budget. Buying a home costs more than just the listing price and requires smart budgeting to plan for housing-related expenses. First off, most mortgages require a down payment of at least 20% to avoid having to pay private mortgage insurance (PMI). While no-down payment and low-down payment home loans do exist, it’s important to keep in mind that a down payment helps to lower your monthly payments. Closing costs should also be considered. Paid at the time of your mortgage closing, these fees can total around 2% to 5% of the home’s purchase price. Moving expenses, furniture, utilities, and property taxes will all need to be accounted for as well. It’s also wise to have an emergency fund for home maintenance and unexpected repairs. Saving a few months’ worth of expenses can help ensure you’re financially ready for homeownership.
• Your Debt-to-Income Ratio (DTI). Your DTI compares how much you owe each month to how much you earn. Lenders use this to decide if you can handle a mortgage. A lower DTI means you’re more likely to get approved. Many financial experts recommend keeping your DTI below 43%. You can use a calculator to check your DTI, and if it’s too high you should focus on paying off some debt before applying for a home loan.
• How Much You Can Afford. Use a mortgage qualifier calculator to figure out how much house you can afford. This tool looks at your income, debts, and expenses to give you a realistic idea of what you can afford to spend on a home. Buying more than you can afford can result in you falling behind on your mortgage payments or even losing your home to foreclosure. Be honest with yourself and stick to your budget.

2.  Think About Your Lifestyle & Personal Goals

Buying a home isn’t just about money. It’s also about your life and future plans. Make sure to think about the following:

• Your Job Stability & Income. Consider if you are currently in a stable job. Do you expect your income to stay the same or grow in the coming years? A mortgage is a long-term commitment, so it’s important to feel secure in your career so you can confidently pay your loan on top of your other financial commitments.
• Your Long-Term Plans. Many financial experts recommend only buying a home if you plan to stay in it for at least five years. Selling too soon can be expensive, especially if your home hasn’t had time to increase in value or you haven’t built much equity. You could end up owing more than your home is worth when you sell, or losing money after closing costs and fees. If you’re unsure where you’ll be in a few years due to your career or lifestyle, renting might be a better option for now.
• Your Emotional Readiness. Owning a home comes with responsibilities. You’ll need to handle repairs, yard work, and regular maintenance. Are you ready for that? Also, think about how you handle stress. The homebuying process can be emotional, especially in a competitive market. Make sure you’re prepared to stay calm and focused.

3.  Understand the Market

Even if you’re financially and emotionally ready to buy a home, the housing market can affect your decision. Here are some tips to consider:

• Research Your Local Market. Take time to understand the housing market in the area where you want to buy. Are home prices going up or down? Are homes selling quickly, and is inventory limited? A fast-moving, low-inventory market may mean more competition and higher prices, so prepare for that when you’re deciding which homes to put an offer in on. You may need to target homes that are less expensive than what you can afford, so you can be ready for a competitive offer. Since market conditions can vary by neighborhood, it’s important to focus your research on the specific area you're interested in.
• Don’t Try to Time the Market. It can be easy to fall into the trap of waiting for the “perfect” time to buy a home. You might be tempted to wait until home prices drop or mortgage rates go down. But the truth is that the real estate market is unpredictable and constantly changing. Trying to time the market can lead to missed opportunities, especially if you’re financially and personally ready to buy now. If you find a home that fits your budget, meets your needs, and feels right, it may be better to move forward than to wait for the market to improve. 

Buying a home is one of the biggest decisions you’ll ever make, and it’s not worth rushing. Whether you’re ready to buy now or need more time to prepare, the key is knowing where you stand. By taking time to evaluate your financial health, lifestyle, and the realities of the current housing market, you’ll be better equipped to make a confident, informed decision. If you’re a Massachusetts or Rhode Island homebuyer who is ready to start the homebuying process, reach out to our dedicated mortgage team today. Our expert loan officers can help you figure out how much home you can afford and guide you toward the mortgage that best fits your unique financial situation.