Buying a home, lesson 1 of 14. About 3 minutes. Updated November 2026.
Are you ready to buy?
Written by David Pham, REALTOR®, CA DRE #02438878
The short answer
You are ready when the full monthly cost fits your life, you can close and still have a cushion, and you expect to stay long enough to make it worthwhile.
A five-part readiness check
1. Your time horizon
Buying and later selling both cost money, so a short stay is hard to recover from. If a job change or a move is likely within two or three years, renting keeps your options open. See renting or buying for how the years change the math.
2. Your monthly comfort number
Work out the full monthly cost of the kind of home you want, then compare it with your take-home pay and your other goals. A lender will tell you the most they will lend. That is a ceiling, not a recommendation.
3. Your cash
You need three separate piles: the down payment, the closing costs, and a reserve you do not touch. Emptying your savings to close leaves you exposed to the first broken water heater.
4. Your credit and debts
Lenders look at your credit history and at your debt-to-income ratio, which is your monthly debt payments divided by your gross monthly income. Paying down a car loan or a card balance before you apply can improve both. Check your credit reports for errors early, since corrections take time.
5. Your capacity for the work
Owning means you are the one who arranges repairs, reads the HOA notices and handles the paperwork. That takes hours, not only dollars.
A Bay Area example
Sample numbers for a $900,000 home at a 6.5% 30-year fixed rate. Yours will differ.
| Down payment at 20% | $180,000 |
|---|---|
| Closing costs at about 2.5% | $22,500 |
| Reserve: six months of full housing cost | $38,330 |
| Cash to have before you buy | $240,830 |
With 10% down the first line falls to $90,000, but the loan is larger and mortgage insurance is added, so the monthly cost and the reserve both rise.
Try the payment before you buy
This is the most useful test there is. If you pay $3,400 in rent and the home you want would cost $6,388 a month, move the difference of $2,988 into savings every month for six months.
If that feels manageable, you have proof the budget works, plus $17,930 more toward your reserve. If it feels tight, you learned that for free.
You do not always need 20% down
Many buyers put down less. Conventional loans can go as low as 3% to 5% for qualified buyers, FHA loans start at 3.5%, and eligible veterans can use VA loans with no down payment. The California Housing Finance Agency, CalHFA, offers down payment and closing cost assistance to buyers who meet its income and other limits.
A smaller down payment gets you in sooner, with a higher monthly cost. Neither path is wrong. Compare them with real numbers from a lender.
Mistakes to avoid
- Shopping by the price a website says you can afford.
- Draining every account to reach 20% down.
- Opening new credit, financing a car or changing jobs right before or during a loan application without asking your lender first.
- Waiting for a perfect moment. Rates and prices move; your own readiness is the part you control.
Questions to ask
- Yourself: where do I expect to live and work in five years?
- Lender: what would I qualify for, what would it cost each month, and which low-down-payment or assistance programs fit me?
- Agent: what does my comfortable budget buy in the areas I like?
What to remember
- Decide your own monthly limit before a lender gives you theirs.
- Keep the down payment, closing costs and reserve as three separate amounts.
- Practice the payment for a few months.
Write down a comfortable monthly budget and the cash you want left after closing. That is your starting point.
