Ready to Buy a House? 8 Factors to Consider First (2026)

Updated October 2026. The eight factors to weigh before you buy a house, with this month’s rates and a quick readiness test.

The main factors to consider when buying a house are your mortgage rate, debt-to-income ratio, credit, down payment, closing costs, insurance, location and the home’s condition. As of October 22, 2026, Freddie Mac’s average rates were 7.32% on a 30-year fixed loan and 6.68% on a 15-year. NAR put the September median existing-home price at $417,500.

Jump to: 💲 Rates · 🪜 DTI and credit · 🏢 Upfront costs · 📍 Location · 🏠 Condition · ❓ FAQ

Buying is a big decision, and it’s easy to fall for a house before you’ve checked the numbers. Work through these factors in order. If one doesn’t add up, it’s better to know now than after you’ve signed.

How do mortgage rates change what you can buy?

Rates move every week, and from lender to lender. Get several quotes and compare the annual percentage rate (APR), which folds fees into the cost, so you’re comparing apples to apples.

Loan length matters too. Lenders track both terms, and 15-year and 30-year rates don’t always move together; you’ll often see that 15 year refinance rates are changing at a different pace than 30-year rates. Here’s what the October 22 averages mean on a $375,750 loan, which is 90% of the median price:

These are our own calculations, before taxes and insurance. A year earlier, Freddie Mac’s survey had the 30-year average at 6.19%, so a quote from last fall won’t match today. Pick the term whose payment you can carry in a bad month, not just a good one.

What debt-to-income ratio and credit do you need?

The CFPB defines DTI as all your monthly debt payments divided by your gross monthly income. Its example: $1,500 for the mortgage, $100 for a car loan and $400 for other debts is $2,000 a month. On $6,000 of income, that’s 33%. Different loans and lenders set different limits, so ask each lender for theirs.

Lowering DTI before you apply can help more than you’d think. Paying off a small card or car loan removes a whole monthly payment from the math. Some buyers look at consolidation to replace several high-rate payments with one, for example consolidating debt in California, where high-interest balances are common. Read the terms closely and check how any program affects your credit before you sign up.

Credit score

Your score affects both approval and your rate, so check your credit score months before you shop. Fannie Mae’s credit score rules set a 620 minimum for manually underwritten fixed-rate loans; loans run through its automated system have no fixed minimum, and each lender can add its own floor. VA and USDA loans depend on eligibility, such as military service or the property’s location, not only on your score.

If debt is dragging your score down, California debt relief options are one route people look at. Our guides on how to fix your credit to purchase a home and getting a mortgage when your credit isn’t great cover other options.

How much cash do you need up front?

Down payment

Your down payment is the share of the price you pay yourself. On a $417,500 home, 10% is $41,750. With a conventional loan, the CFPB explains that less than 20% down usually means private mortgage insurance, which protects the lender. Some government-backed programs allow low or no down payment if you qualify.

Closing costs

Closing costs are the fees to finish the purchase. The CFPB’s list includes appraisal fees, title insurance, government taxes, and prepaid property taxes, insurance and interest. Your Loan Estimate shows the expected total. You can negotiate a seller credit, but the CFPB notes the seller may want a higher price in return. Our page on how much closing costs are has more detail.

Homeowners insurance

Lenders require it, and it’s wise even without a loan. Your homeowners’ insurance premium depends on the home’s age, location, type and coverage. Get quotes from several insurers before you make an offer, especially in storm or wildfire areas, where premiums can change the whole budget.

How much should location weigh?

You can change a kitchen. You can’t change the street. Think about the commute, schools, noise, flood or fire risk, and how close you are to the places you go every week. Visit at night and on a weekend, and talk to a neighbor if you can.

• Neighborhood: traffic, parking, upkeep of nearby homes.
• Schools: ratings and boundaries, even if you don’t have kids, because they affect resale.
• Commute: try the drive at rush hour.
• Weather and hazards: flood zone, wildfire maps, hurricane exposure.
• Amenities: groceries, parks, health care and transit.

How do you judge a home’s condition?

Older homes often need work, and even new ones have small fixes. Price the big items before you offer: roof, HVAC, water heater, plumbing and electrical. A professional inspection is the best way to find what you can’t see, and a repair quote turns a worry into a number you can negotiate with.

Buying a home that needs updates? Budget for them on top of the price, and see our home renovation checklist for planning. If you’re also selling, our tips on getting your house ready to sell help on that side.

How do you know you’re ready to buy a house?

You’re likely ready if most of these are true: steady income for the past two years, a DTI that fits your lender’s limit, savings for the down payment and closing costs with an emergency fund left over, a plan to stay several years, and a pre-approval in hand. If two or more are missing, use the next few months to close the gap. Our first-time buyer checklist walks through each step, and five millennial mortgage tips adds a few more.

When you’re ready, the Beycome buyer program helps with search, showings, offers, counteroffers and closing. There’s no upfront fee: Beycome keeps 1% of the price (minimum $1,499) and credits the rest of the buyer-agent commission to you at closing, with lender approval. On a $400,000 home where the seller offers 3%, that’s $8,000 back.

The 3% is an example only: commissions are not set by law or NAR rules and are fully negotiable, sellers choose whether to offer any buyer-agent compensation, and since August 17, 2024 such offers can’t be shown on the MLS. The program is open to every buyer on homes listed by other agents; the credit can’t apply where no buyer-agent commission is offered, like most FSBO homes, or on homes listed by Beycome sellers.

Thinking of renting out a property later? Landlords may find why skip tracing is a convenient debt recovery solution for landlords useful.

Frequently asked questions