Whether this is your first time buying a home or the first time you’ve bought a home in many moons – it’s a lot to undertake. One of the best things you can do to prepare yourself for buying a home is to save up and save early. 

Read on to discover some of the best things you can do before you start shopping in the real estate market. 

Join us to have information like this delivered to your inbox.

How to Financially Prepare for Buying a Home

Buying a home can be a daunting task for first-time buyers or even people who have bought before. There are a lot of moving pieces, so it’s important to understand what you’re saving up for before you begin saving. 

According to the National Association of Realtors, the median existing home price for single-family homes in the United States was $412,100 as of April 2024. To afford a home at this price point, you’ll need to save enough for a down payment, closing costs, appraisal fees, title insurance, and more. 

Every homebuyer’s journey is unique, but the steps to financial readiness are universal. With careful planning and informed decisions, you can turn the key to your dream home with confidence.

Understand Your Credit Score

Before you even begin to look into buying a home, it’s crucial to understand your credit score and its impact on your mortgage prospects. A higher credit score can lead to more favorable mortgage rates, which means lower monthly payments.

Visit AnnualCreditReport.com to get a free credit report from the three major bureaus. Scrutinize it for any inaccuracies and dispute them if necessary. If you choose to undergo a dispute resolution, the process can take between 30 to 45 days

Assess Your Financial Health When Buying a Home

An honest assessment of your financial situation is key. This involves:

  • Calculating your debt-to-income ratio to ensure you’re not taking on a mortgage that’s too large
  • Reviewing your savings to cover down payments and closing costs
  • Ensuring you have an emergency fund beyond your home-buying expenses

Create a Realistic Budget

Creating a budget that reflects your current expenses and your future mortgage payments is vital. There are several online tools and calculators available, such as those at Bankrate, which help in estimating potential mortgage payments.

Calculate Additional Homeownership Costs

Remember, owning a home comes with additional costs outside of the mortgage, including property taxes, insurance, maintenance, and potential homeowners association (HOA) fees. Factor these into your budget to avoid surprise expenses.

Start Saving for a Down Payment

Many experts agree that home buyers should aim to save at least 20 percent of the home’s purchase price for a down payment. This can significantly affect your mortgage rates and eliminate the need for Private Mortgage Insurance (PMI). User-friendly tools like Mint can help track your savings goals.

Explore Mortgage Options When Buying a Home

There are various types of mortgages available and each has its various pros and cons. Researching whether a fixed-rate or adjustable-rate mortgage suits your situation is important, as is understanding the terms, interest rates, and fees associated with each option. Institutions like the Consumer Financial Protection Bureau offer valuable resources.

Get Pre-approved for a Mortgage

Pre-approval gives you a better idea of how much you can afford and shows sellers that you are a serious buyer. Gather necessary documents like income verification, credit history, and asset documentation for this process.

Maintain Your Financial Stability When Buying a Home

When preparing to buy a house, it’s essential to maintain some financial stability:

  • Avoid large purchases that could affect your credit score or debt-to-income ratio
  • Keep your job – lenders typically look for stability in employment history
  • Continue to save – unexpected costs are a reality in home purchases

Consider Future Life Changes

Your home should be a reasonable fit for your lifestyle for at least the next few years. Whether it’s growing your family, changing careers, or retiring, these factors will influence the type of home you buy and your ability to afford it long-term. Don’t invest in a home that needs a lot of repairs if you don’t have the time, energy, or additional funds to make that happen, for instance.

Consult with Professionals

Lastly, don’t hesitate to consult with real estate agents, financial planners, and mortgage brokers. These industry experts provide valuable insights and can help navigate the more complex aspects of buying a home. Entities like the National Association of Realtors can help you find qualified agents.

When following these steps, you can move forward in your home-buying journey with a sturdy financial foundation. The key is to start preparing as early as possible, stay informed, and seek expert advice when you aren’t sure how to proceed. With determination and planning, the path to your dream home will be clear and achievable.


To have more information like this delivered to your inbox, consider joining us. 


Founded in 2010, our services include boutique hedge funds, separately managed accounts, financial planning, estate & trust services, private placements, life insurance and annuities, and in-house concierge services for high-net-worth individuals, families, and businesses. To find out more about our services or reach a registered investment advisor, please fill out the Contact form.


PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All investments involve risk, including the loss of principal.