Are You Ready to Buy a House?: You’ll need to consider more than just finances

Understand Your Debt-to-Income Ratio First
The first and most apparent decision point involves money. If you have sufficient means to purchase a house for cash, then you certainly can afford to buy one now. Even if you didn’t pay in cash, most experts would agree that you can afford the purchase if you can qualify for a mortgage on a new home.

What Mortgage Lenders Want
You also need to consider the front-end debt-to-income ratio, which calculates your income vis-à-vis the monthly debt you would incur from housing expenses alone, such as mortgage payments and mortgage insurance.

Can You Afford the Down Payment?

There may be some reasons that you might not want to put down 20% toward your purchase. Perhaps you aren’t planning on living in the home very long, have long-term plans to convert the home into an investment property, or you don’t want to risk putting that much cash down.

Being able to Buy A House today is not nearly as important as your ability to afford it over the long haul.

The Housing Market
Assuming you have your money situation under control, your next consideration is housing-market economics—either in your current locale or the one where you plan to move. A house is an expensive investment. Having the money to make the purchase is excellent, but it doesn’t answer whether or not the purchase makes sense from a financial perspective.