7 Strategies to Buy a House On a Budget

It’s never too late to buy a house, but it is not a process to rush into.

There are so many ways to mess up the home-buying process, especially if you’ve never done it before.

Here are seven tips to help you get started and stay on budget with your new abode.

Assess your readiness to buy

Are you financially and emotionally ready to buy a home? Why do you want to buy a home?

Make a list of all of the reasons, benefits, and drawbacks of owning a home.

Are you buying a home to live in it for a few years, a decade, or a lifetime? Are you financially and physically ready for the regular maintenance that owning a home requires? 

Owning a home is a big choice. Don’t become a homeowner on a whim. Don’t make a choice you’ll end up regretting if you’re not ready.

Assess your finances

The housing market is extremely volatile. A new house can cost more than a half-million dollars. Even a fixer-upper home will run you anywhere from $100,000 to $300,000.

You should be gainfully employed, be able to pay a down payment, and be ready for decades of mortgage payments.

Have good credit

A credit score of 670 to 739 is considered a good score. A 620 credit score is the bare minimum required to be approved for a mortgage.

You should at least have a credit score of 720 when buying a house.

Unless you qualify for federal housing or military-based loans, you may want to wait a few years rehabbing bad credit before buying a house.

Get your mortgage loan pre-approved

Once you get mortgage pre-approval from a lender, you will get a letter that proves you got the money to back up your offer.

You can save the approval process for later, but it may be hard for some potential sellers to take you seriously as a buyer.

Plan your house hunting

Make tier lists of neighborhoods in which you will house hunt. You may not get the house that you want, so make a list.

Research the schools, businesses, and job market in the neighborhoods you may live in. If you are going to live in a house for years, make sure you like the neighborhood.

Get an inspection and home appraisal

A home seller has a lot of reasons to hide problems or defects with the home from you, and they all deal with money. The house could have structural problems, flooding damage, mold, or a host of unseen issues.

Hire your own inspector to check out the house, and get an appraiser to verify the home’s current market value.

Hire a real estate agent

Unless you are determined to buy a home on your own, you should consider consulting a real estate agent. They understood the process, and they are better equipped to help you find the house you want on your financial terms.

Shop around. A good agent will provide you with clear terms and costs upfront. You should know what you are getting and what you will have to pay for at closing, once the deal goes through.