Home Buying Basics

A start-to-finish guide to finding your dream home

Buying a home doesn’t have to be hard. It’s all about knowing what you’re getting into and being confident in your choices. By following these steps, you can look after your financial well-being and keep stress levels down so that you can focus on what’s really important: finding a place to call home.


Determining your budget is the first step. As a general rule of thumb, you should look at home prices that are two to three times your annual income. If you’re buying with a partner, use joint income in this equation. This helps to ensure that you won’t be taking on a mortgage that you can’t afford. A monthly mortgage should not exceed 28% of your monthly income.1 If it does, you’ll have to tighten your belt and maybe resort to bland ramen dinners.

You’ll need to save too. As you’re gearing up to buy a home, it’s best to plan on saving as much as you can for a down payment. Most people strive for 10% of the down payment. 20% is ambitious but will give you the most wiggle room and you’ll want to give yourself as much padding as you can. Once you move in, you’ll be thankful to have some money to redecorate, cover maintenance costs, and get that backyard grill you’ve always wanted.


There are many to choose from, but before we get there, make sure you choose a lender that answers your questions and makes you feel comfortable. If they offer to walk your dog while you go away on vacation, you’re in good hands.

The most common mortgages are fixed-rate mortgages, in which your interest rate is locked in. With adjustable-rate mortgages, the interest rate fluctuates depending on the market.2 So think of latter as your waistline before and after the holidays. Adjustable-rate mortgages can be good if you’re looking for flexibility, but the best advice if you choose one is this: overpay on your monthly payments. Most mortgages run the course of a 15 or 30-year term. Regardless of the mortgage length, you can get ahead if you pay more each month that you're able.

A monthly mortgage should not exceed 28% of your monthly income.


Do this before you begin looking for a home. It’s as important as putting on pants before you leave the house. Getting pre-approved will help you determine the price of homes you can consider and you’ll sleep well knowing that once you make an offer, a seller will know you’re a qualified buyer. Just remember that a bank may approve you for a larger loan than you need. Stick to your financial planning and follow your instincts.


This is the fun part, so start brainstorming. Remember that your first home doesn’t have to be a Frank Loyd Wright house or even a McMansion. What does a perfect home (within your budget) have to have? Some things to think about are: number of bedrooms, yard space, and proximity to work, good school districts, and that new farm-to-table restaurant you’re obsessed with. Consider what type of home best suits your needs. Make sure the bathroom and kitchen layouts fit your needs, otherwise you’ll be obsessing over where you to squeeze that kitchen island you’ve always wanted.

Here are a few essentials to keep in mind while you’re compiling your checklist:

  • Don’t judge a room by its paint job
  • Make sure the house is well insulated
  • Ask about the state of the plumbing
  • Access the roof
  • Make sure the lights and faucets are working
  • Keep your eyes peeled for crazy neighbors


Having as many people on your side during this process is paramount. Browsing online listings of homes will only grant you a cursory look into your options. A real estate agent can unveil more listings and also take care of a lot of the busy work so you can sit back and do what you should be doing: considering your options. They can also provide muscle when negotiating prices. Why get your hands dirty?

Purchasing a home is a major life milestone. It’s one of the most adult things you’ll ever do. With a little time, care, and some solid planning, you can take control of the process and make the system work for you.


Determine your budget

Build your savings

Find a good mortgage

Get pre-approved

Know what you’re looking for

Find a real estate agent


Buying a home doesn’t have to be daunting. CENTURY 21 breaks down the process (it’s easier than you think).

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