How to Know If You're Ready to Buy a Home: A Self-Assessment for Renters

By Amber Jones

If you're renting and wondering whether you're actually ready to buy a home, you're not alone. Maybe you've thought about it a few times, checked out listings online, or even talked yourself out of it because you're unsure where to start. It can feel overwhelming, especially when everyone seems to have an opinion and there’s no clear checklist.

That’s exactly why I created this guide. Whether you’re thinking about buying in the next few months or just want to get on track for the future, this will walk you through a simple, honest way to assess where you stand.

In this guide, we’ll go over three areas that matter most when preparing to buy a home:

1. Your credit score

2. Your monthly payment comfort zone

3. How much you’ve saved for your down payment and closing costs

Before we get into the details, I also put together a video that explains everything step-by-step. If you’d rather watch or want a visual walkthrough, check it out below.

📺 Watch the video👇

1. Start with Your Credit Score

Your credit score is one of the first things lenders will look at when you apply for a mortgage. It affects what kind of loan programs you qualify for and what kind of interest rate you’ll get. A better rate usually means a more affordable monthly payment.

The sweet spot? A score of 780 or higher is ideal if you want the best terms. But don’t let that number scare you. Many loan programs, like FHA, allow credit scores as low as 500.

Even if your score isn’t perfect, it’s about understanding what you’re working with and improving over time.

Simple ways to manage and improve your score:

• Use apps like Credit Karma or your bank’s credit tracker to monitor your score

• Make on-time payments for all installment loans (car loans, student loans, etc.)

• Keep credit card balances under 50% of your available limit before your statement closes

• Avoid maxing out your cards, especially when your billing cycle is about to end

Remember, it’s not just about paying off debt. It’s also about when that information is reported to credit bureaus. That timing can impact your score more than you think.

2. Know Your Comfortable Monthly Payment

This is a game-changer. One of the best indicators of mortgage readiness is comparing what you pay in rent now to what you'd feel comfortable spending on a mortgage.

Let’s say you currently pay $3,000 a month in rent. If you’ve looked at your budget and decided you could stretch up to $3,500 for a mortgage, that extra $500 tells a story. It shows potential for savings—and your next move is to act on that.

Here’s a practical way to use that info:

• Set up an automatic transfer for the difference ($500 in this case) into a savings account each month

• Schedule the transfer on the same day you pay your rent so it becomes part of your routine

• Think of this as a test run—it helps you see how your budget feels at that higher number

If it’s comfortable, great. If it’s a stretch, adjust. The point isn’t to push yourself too hard—it’s to get a realistic feel for what works and build the habit of saving along the way.

You might even realize you can save more than you thought just by cutting out a few takeout meals or skipping a couple of coffee runs. It’s not about being perfect. It’s about being intentional.

3. Understand the Full Cost: Down Payment + Closing Costs

A lot of people delay buying a home because they think they need 20% down. That’s a myth that needs to go.

There are plenty of loan programs that let you buy with as little as 3% down. You’ll also need to plan for closing costs, which usually come out to about 3% of the purchase price.

If you're not planning for both, you might be caught off guard.

Here’s how to estimate what you’ll need:

• Choose your price range (for example, $500,000)

• Multiply by your chosen down payment percentage (let’s say 5%)

• Then add 3% for closing costs

So, for a $500,000 home with 5% down and 3% in closing costs, you’d need around $40,000 total.

This is what I call your “all-in investment.” It includes everything you’ll need to close on the home, not just the down payment.

How to build momentum with your savings:

• Keep using your auto-transfer system from Step 2

• Put the funds in a high-yield savings account or somewhere that earns interest

• Track your progress and give your goal a name so it stays top of mind

And remember, even if you’re putting down less than 20%, mortgage insurance isn’t the enemy. In many cases, it’s manageable and may even be tax-deductible. What’s more important is getting into the market so you can start building equity sooner.

Recap: Are You Ready to Take the Next Step?

Let’s bring it all together. If you’re serious about buying a home—even if it’s a year from now—these are the steps to take:

• Check your credit score: Know your starting point and create a plan to improve

• Get your budget working for you: Use rent vs. mortgage comparisons to save the difference

• Set a savings goal: Understand your full investment (down payment + closing costs) and start building toward it

These habits don’t just help with pre-approval. They build financial confidence, too.

And when you’re ready to explore your options, having done this prep will make the whole process smoother, faster, and less stressful.

“You don’t have to be perfect to get started. You just need a plan—and the willingness to stick with it.” – Amber Jones

FAQ: Common Questions From Renters Considering Buying

Q: Do I need 20% down to buy a home?
Not at all. You can buy with as little as 3% down. While 20% removes mortgage insurance, it’s not a requirement.

Q: What’s a good credit score to aim for?
Try to reach 780 or higher for the best rates, but options exist for scores as low as 500.

Q: How much should I save for closing costs?
Plan on about 3% of the home’s purchase price. This can vary slightly based on location and lender.

Q: Can I really afford a mortgage if I’m renting now?
Look at your current rent compared to your desired mortgage amount. The difference is a great place to start saving and testing your budget.

Q: What if I’m still unsure about timing?
That’s okay. Start small. The earlier you plan, the more options you’ll have when you’re ready.

Ready to Take the First Step?

Whether you’re thinking about buying in 30 days or sometime next year, having a plan makes all the difference.

If you'd like help creating your personalized roadmap to homeownership, I’d love to connect. You can book a 15-minute consultation using the link below.