Generally, a first-time homebuyer is someone who hasn’t owned a primary residence in the past three years. You can also be considered a first-time buyer if:

You’ve shared ownership of a house with a spouse in the past but are now buying solo.

You’ve been renting or living with family.

You haven’t held a mortgage in three years.

You’re buying in a designated redevelopment area, where certain programs have less strict rules.

If you’re wondering if you’re ready to buy a house, consider these three factors:

Financial stability: If you have a low credit score, lots of debt, and not enough funds to cover a down payment and closing costs, you may want to wait to buy a home.

Job security: Stable employment and income are key indicators for lenders when qualifying for a mortgage.

Future plans: It might not be a good time to buy a home if you plan on moving in two years or less.

While there’s no golden rule for how long you should plan to live in your first home, it’s ideal to stay at least several years.

This way, you’ll have a chance to build equity.

The longer you own your home, the more equity you’ll build, leading to greater financial return when you decide to sell your home.

Ultimately, it’s a good time to buy a home when you’re ready for it. Your financial readiness and long-term goals are both great factors to think about.

On top of that, it’s also smart to check your local housing market trends and mortgage interest rates.

Speak with a real estate agent to help determine if you’re in a good position to begin the homebuying process.

Most homebuyers will need to think ahead about the following costs when estimating how much money is needed to purchase a home:

Down payment: The down payment is a percentage of the home’s purchase price, anywhere from 0% to 20% depending on your loan. For example, a 10% down payment on a $500,000 home would be $50,000.

Closing costs: Typically 2-5% of the home’s purchase price. It covers a variety of fees like lender and title fees, property taxes, home inspection, and homeowners insurance, to name a few.

Moving expenses: These can include hiring movers, transportation, and purchasing packing supplies.

Emergency fund: It’s wise to have 3-6 months’ worth of living expenses for unexpected costs.

Ongoing costs: Beyond your mortgage payment, be prepared for ongoing expenses such as property taxes, utilities, maintenance, and homeowners insurance.

On the same topic, it’s important to know how much house you can afford. You can estimate affordability with your current income and down payment. Make sure to also account for closing costs, insurance, and additional fees.

You’ll also want to consider your debt-to-income (DTI) ratio, which is a primary concern for lenders.

This measures your debt payments each month in relation to your gross monthly income.

While some lenders allow a DTI up to 43% or higher, they typically follow the 28/36 rule: You should allocate no more than 28% of your monthly income on housing, and no more than 36% on debt payments.

While it’s beneficial to have a great credit score, there are loans that cater to buyers with lower ones.

It’s important to note, however, that your credit score influences your interest rate and loan options. Here are the minimum credit scores needed to qualify for certain loans:

Conventional loans: 620-660

Jumbo loans: 700

FHA loans: 500-580

VA loans: no requirement

USDA loans: typically 620, but can be lower

A common myth is that you need a 20% down payment in order to buy a house.

While putting 20% down is beneficial, it’s not required. Several loan options, such as FHA or VA loans, only require a down payment of 3.5% or 5%.

Keep in mind that there may be additional costs associated with a down payment under 20%, like paying for private mortgage insurance (PMI).

The short answer is yes. You can buy a home with no down payment. There are two loans available that allow you to buy a home with zero down:

VA loans offer no-down payment loans for active-duty service members, veterans, qualifying spouses, and current or past members of the National Guard or Reserve, and other beneficiaries who meet the criteria.

USDA loans, backed by the U.S. Department of Agriculture, offer zero-down payment mortgages for qualifying homebuyers purchasing in specific rural or suburban areas.

If you don’t qualify for one of these programs, there are plenty of low-down payment loan options and down payment assistance programs.

Closing costs encompass a variety of fees associated with finalizing a home purchase. These typically include:

• An appraisal fee to assess the home’s value

• Title fees for searches and insurance

• Lender fees for processing the loan

Other common expenses can include legal fees, recording fees, prepaid property taxes, or homeowner’s insurance. In general, closing costs range from 2% to 5% of the loan amount, though this can vary depending on the location and services required.