It’s 2025 and buying a home is a lot more difficult. Gone are the days of the wild wild west of home buying. High interest rates and a small inventory are making the buying scene tricky. But regardless of those issues, there are things that you need to have in place if you’re considering buying a home.
1. Stable Income & Employment
Lenders want to see a consistent employment history (usually at least 2 years). They’re also looking at your income as it determines how much home you can afford. They’re usually looking at the debt-to-income ratio or DTI. Lenders want a ratio under 43%. That means your total monthly debt (including future mortgage) shouldn’t eat up more than 43% of your monthly income.
2. Good Credit Score
Ideally, a lender is looking for a credit score of 620+ for most conventional loans. FHA loans allow lower scores, but with trade-offs like higher mortgage insurance. Obviously, the higher your score the better the interest rate.
3. Down Payment
One of the biggest pieces to buying a home is the down payment. This is the payment you personally need to provide in addition to the loan. It typically ranges from 3–20% of the home’s price.
Some loans (like VA or USDA) require no down payment. First-time buyers may qualify for down payment assistance programs.
4. Pre-Approval for a Mortgage
Once the above items are figured out, the lender can give you a pre-approval for a mortgage. The pre-approval will help you know what price range you can afford and prove to sellers that you’re a serious buyer.
Bonus tip: Aim to find a home a little below the pre-approval amount. This will provide additional margin with expenses.
5. Additional Monies to Consider
Homeownership comes with unexpected costs (repairs, maintenance). Be prepared with an emergency fund/savings. You don’t want to take on a mortgage with nothing for backup.
Besides a deposit, there are plenty of other fees, called closing costs, that you also need to be prepared for. This includes things like an appraisal, title insurance, escrow fees and loan origination fees. Altogether they will total about 2-5% of the home’s purchase price.
6. A Real Estate Agent
We all know at least 3 people in our circle who are realtors. Find one you trust. A good realtor will help you find the right home, negotiate the price and navigate the paperwork. They will also be your resource when it comes interest rates, comparables, and the local housing market. Our realtors will be happy to assist you.
7. Clear Understanding of Your Needs vs Wants
Lastly, you want to have a clear delineation between needs and wants, nice-to-haves and non-negotiables. This will help give everyone focus and not send you and your realtor on a wild goose chase. The more you have on your Need List the harder it will be to find that perfect home. Know what is a necessity and what you can do without from the start.
Homeownership, while difficult, is still possible. When you work to build up a proper credit score, down payment and savings, and get a pre-approval and reliable realtor it will make the process easier.
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