Renting gives you the freedom to move when you want, with none of the responsibilities of homeownership. But at some point, most people yearn for their own home. Buying a house is a good way to start building financial security. As you pay down the mortgage, you build up home equity, which is a valuable financial resource.

Of course, home prices and mortgage rates are not exactly working in your favor. Rates essentially doubled over the course of 2022, and median home prices have risen sharply as well. While the housing market is starting to cool down, the higher rates mean monthly mortgage payments can be a struggle — or even a barrier to homeownership altogether.

“Now that mortgage interest rates have been on an upward trek, coupled with the sustained and substantial surge in home prices across the country, housing affordability is a challenge for many prospective homeowners,” says Mark Hamrick, senior economic analyst for Bankrate. “But the fact remains that it pays to shop around for the best mortgage interest rate when the time does come to buy. All too many buyers only focus on the price of the home when there are other factors that also help to determine monthly payments.”

8 signs you’re ready to buy a house

If you frequently find yourself wondering, “Should I buy a house?” you’re not alone. Deciding whether to rent or buy a home is a major decision. Here are eight signs that you’re ready to make the switch from renter to homeowner.

1. Your rent is rising

Rental prices have risen significantly nationwide, according to, which tracks trends in the rental market. In 2022, the average rent on a one-bedroom unit climbed 27.13 percent to $1,721 year-over-year. Two-bedroom units rose 23.43 percent to $2,054.

Rising rent makes it harder to budget for monthly housing costs and save for other financial goals. When paying rent begins to feel like a bad investment and you want to build equity for the future, it’s time to think about a mortgage, says Bill Golden, a sales associate with RE/MAX Around Atlanta.

Golden says many renters are ready to buy a home once they are financially stable, motivated by pride of ownership and wanting more control over their residence. “If one or more of those is tugging at your heart, at least look into the possibility of owning rather than renting,” he says. “If you’ve seen your rent escalate significantly and you feel trapped, the balance may be tipping toward buying. With today’s escalating rental rates, your monthly outlay could be less on a purchase.”

2. Your credit score is solid

Some renters can’t make the leap to homeownership because they don’t qualify for a mortgage. Low credit scores are a common reason why. A history of late payments or too much debt will hurt your score. One sign that you’re ready to buy a home is having a healthier credit score, says Bruce McClary, senior vice president of communications for the National Foundation for Credit Counseling in Washington, D.C.

Although borrowers with a credit score as low as 500 can qualify for some home loans, they will be required to make bigger down payments and pay higher rates. A good credit score gets you better interest rates and loan terms.

“Establishing a credit history or recovering from a credit setback can take time, but the goal of homeownership is still realistic under those circumstances,” McClary says. “Receiving help from a nonprofit housing counseling agency that also offers credit counseling programs can make a big difference for anyone struggling with those barriers to homeownership.”

Before you apply for a mortgage, get a free copy of your credit report.

3. Your debt is manageable

Another thing lenders look at when screening mortgage applicants is their debt-to-income ratio, or DTI. This is a key metric that’s calculated by adding up all monthly debts, then dividing the sum by your gross monthly income. The higher your DTI, the more risk you pose to a lender. Use Bankrate’s DTI calculator to figure out yours.

Some conventional loans allow a DTI ratio of up to 50 percent, but many lenders prefer no more than 43 percent. If you previously had a high DTI ratio and have since paid off some high balances, you’ll be in a stronger position to get a mortgage. A lower DTI will also allow more wiggle room in your budget to put money into an emergency fund for home repairs and other unexpected expenses.

“Keeping credit card balances low and debt under control is beneficial in many ways,” McClary says. “Keeping your balances at or below 30 percent of the available credit limit has a positive influence on the credit score.”

4. You can afford a down payment

“First-time homebuyers don’t have proceeds from another home to help fund a down payment. It’s one of the main reasons why the down payment is the biggest hurdle to homeownership,” says Rob Chrane, CEO of Atlanta-based Down Payment Resource, which finds programs that help people buy homes.

Down payment requirements typically depend on the type of home loan you get. For conventional loans, 20 percent down is usually required if you want to avoid paying private mortgage insurance. Some mortgages insured by the Federal Housing Administration, known as FHA loans, require just 3.5 percent down. Fannie Mae and Freddie Mac back some mortgage products that require just 3 percent down; and loans guaranteed by the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture require no down payment at all.

Renters interested in buying a home should compare different loan programs to see which one is best for them. In addition, there are grants and programs to help homebuyers with down payments. “There is a wide range of programs for homebuyers today. We track more than 2,500 homeownership programs across the country administered by federal, state, county or local government agencies, nonprofits and employers,” says Chrane.

Another expense buyers should be ready for is closing costs, which typically equal 2 percent to 7 percent of a property’s sale price. The good news is that some closing costs are negotiable. “Because buyers are putting so much of what they have into the down payment, we usually try to get the seller to pay some, if not all, of the closing costs,” Golden says. “Even if [the buyers] have to pay a little more for the house, it doesn’t hurt their pocket as much.”

5. You have enough set aside for maintenance costs

When a pipe bursts or the air conditioner goes out in a rental unit, you don’t have to worry about paying for it. (That’s the landlord’s responsibility.) The same goes for property taxes and routine maintenance expenses.

That’s not the case when you own a home. When you’re the owner, all those costs are your responsibility — so you need to have enough extra money to handle the added expenses. “If you put everything you have into the down payment to buy a house, then you have no money left to do repairs should they come up,” Golden says. “You’re better off spending less on the house so you have some money to make improvements and repairs.”

Routine maintenance expenses can come to $3,000 annually. Replacing big-ticket items like the roof or HVAC system can cost you over $10,000 each. Even smaller issues, like plumbing and electrical repairs or replacing an appliance, can add up over time. And of course, you need homeowners insurance coverage — figure on at least $1,300 in yearly premiums.

6. You’re going through a major life change

Many renters decide to purchase a home after a major life event, such as getting married, says Henry Yoshida, a certified financial planner and CEO of Rocket Dollar, a Texas-based provider of self-directed retirement accounts. A growing family, a new job and children leaving the nest are other common catalysts for people to buy a home.

“The four major cities in my home state, Texas, are simultaneously on top 10 lists for raising a family and retiring, so I see this firsthand,” Yoshida says. “My own neighbors on either side are retirees from California and a young family who relocated from the Northeast for a job.”

7. Your lifestyle is stable

Buying a home involves a lot of upfront costs that can take a few years to recoup, so if you anticipate moving before you can recover those expenses, homeownership might not be the right choice for right now.

Few people work at the same company for decades anymore, but a renter who is ready to buy a house should have job security, says Hamrick. A stable job means stable income, which lowers the risk that you will stop making your mortgage payments and default on the loan. This is especially true if a recession is looming, as many economists predict — buying a house during a recession is a dicey proposition if you fear your job may soon be in danger.

“For two-income households, obviously the risk and opportunity are twice that of situations where there’s just one wage earner,” Hamrick says. “In a perfect world, buyers would buy a home well beneath their means so they aren’t devoting so much of their income to the mortgage and other related costs.”

8. You know what you want

It’s smart to have a good idea of the area or neighborhood you want to live in and the type of home you want before you begin your quest. Houses, townhouses, condos, co-ops, duplexes — there are lots of options out there, and each one has its own considerations. If you buy a condo, for example, you won’t have any yardwork, but you will have monthly homeowners association fees in addition to your mortgage payments.

Determine what you need and what is most important to you. Is it being near a good school or within walking distance of your job? Do you mind navigating stairs or having neighbors living above you? Do you want lots of amenities? If you’ve moved to a new city or state to take a job, it might be a good idea to rent until you’ve familiarized yourself with the area. That way, you are more likely to choose a home and neighborhood you’d like to settle in.

Next steps

Ready to leave renting behind? Before you start looking at homes for sale, shop around, compare lenders and get preapproved for a mortgage. Preapproval helps you know how much house you can afford and what loan program is best for your situation, says Ben Creamer, principal and managing broker of Downtown Realty Company in Chicago.

“This sets a realistic expectation for what the buyer is qualified to purchase, as well as what financial resources will be needed for closing,” he says. “Knowing this upfront allows sufficient time to save and test the budget constraints.”

As you weigh the decision to buy a home, make sure you can still reach your other financial goals, Hamrick says. Don’t let a new mortgage prevent you from paying down student loans or credit cards, or from saving for retirement.

“To have a good chance of achieving a range of financial objectives, buyers should also have emergency savings,” Hamrick says. “That’s because of the inevitable expenses associated with homeownership.”


  • Buying a house can be a good idea depending on your situation, but it’s not guaranteed to be one. In general, homeownership is more beneficial than renting, because you’re gaining possession of a valuable asset. But that depends heavily on your personal finances and what you’re able to afford. If you’re not in a place to afford a down payment, closing costs and monthly mortgage payments, renting may be a better option for you.
  • Depends on what you mean by “best.” Spring and summer are the traditional house-hunting seasons, and are the best in terms of supply: the inventory of available homes is the largest then. However, in terms of prices, fall and winter might be the best time of year to buy a house — prices tend to cool as the weather does.
  • You shouldn’t buy a house if doing so is unaffordable or will leave you strapped for cash (aka “house poor“) each month. Nor should you purchase if you have poor credit or are unwilling to deal with the maintenance and upkeep of a home. There is no landlord to call when your roof starts leaking or a fuse blows. A condo may be a better alternative if you want to live a low maintenance lifestyle while still benefiting from equity in your property.