If you are considering buying a home, you better have your financial house in order first (pun intended).  Buying a home and keeping it livable requires more than a down payment of 10-20%.  You will also have to pay for ongoing home maintenance, property taxes and beyond.  Let’s take a look at what your financial picture should look like before you even consider buying a home.



Consider Your Debt Level

A solid credit score is necessary to obtain a mortgage.  However, your credit rating and debt level also impact your ability to pay for home costs across posterity.  As an example, if you have merely one or two lines of credit and need to put the cost of home maintenance or other home costs on a credit card, you might max out your line(s) of credit quicker than desired.  Furthermore, if your debt-to-income ratio is high, you will struggle that much more to pay your monthly mortgage bill.  When in doubt, pay down those credit cards before buying a home.  This way, you can put a considerable portion of your paycheck toward paying off your home mortgage rather than credit cards, student loans and other debt obligations.



Consider the Cost of Filling the Home

No one wants to live in an empty house.  However, once you take a look at the costs of appliances and furniture, you will be hesitant to fill the entirety of your home with necessities and niceties.  Plan on spending at least $5,000 to $10,000 on furniture and appliances.  If you do not have this amount of money in your savings account, think twice before buying a home.

Do You Have an Emergency Fund?

Every homeowner should have a substantial emergency fund.  This fund should have 3-6 months worth of living expenses.  Do not touch this money until a true emergency arises.  If you are financially pressed to the point that you cannot afford to establish an emergency fund, this might not be the right time to buy a house.



Consider how Much of a Down Payment You can Afford

Your down payment is of the utmost importance as it shapes your monthly payment.  If you can only afford 5-10% of the home’s total price as a down payment, think twice before making an offer on the property.   Ideally, you will be able to put up at least 10-20% of the home’s value in a down payment.  Otherwise, your monthly mortgage payment will be that much higher.  Do not lose sight of the fact that things will go wrong with your home in due time.  If the bulk of your income is redirected to paying the mortgage, you might not have enough money remaining to pay for home maintenance and improvement projects.



Don’t Forget About Those Closing Costs

Though there are some home sellers willing to pay closing costs to move the deal along, this is becoming quite the rarity.  You will likely have to pay closing costs on your own.  If adding between 2-5% of the home’s value in closing costs breaks your budget, you are not ready to buy a home.  Closing costs cover everything from underwriting fees to the loan origination fee, recording fees, home inspection fees, prepaid property taxes, title insurance and beyond.