Sidebar: Buying a House
Phase 2: Build a Routine · Sidebar after Step 8
Buy the house that keeps your surplus.
In short
If you rent, buy only after Step 8, with a real down payment saved on top of your emergency fund. Aim at or below your area's median price. The goal isn't the nicest house you can get approved for; it's one that leaves money left over every month.
Why this comes here
After Step 8 you have no consumer debt, a full emergency fund and a healthy surplus, which is exactly what makes a mortgage safe. Buy earlier and the payment can swallow the surplus you just spent years building.
How to do it
- Save a down payment in addition to your emergency fund: 10% at minimum, 20% to skip private mortgage insurance (PMI).
- Work out the full monthly cost: principal, interest, taxes, insurance and any PMI. Put it into your Undetailed Budget in place of rent.
- Shop only in the price range that keeps a solid surplus. If nothing fits, keep saving and look again in a few months.
- Be wary of "first-time buyer assistance" that turns out to be another loan.
Example Family: Alex and Jordan
They save 20% down on a $400,000 house: $80,000, about three and a half years of saving. The $320,000 mortgage costs about $2,350 a month with taxes and insurance. With rent gone and a few raises: Income $6,300 · Recurring Expenses $2,650 · Personal Spending $2,500 · Savings & Debt Repayment +$1,150 a month.
Examples are hypothetical.
You're done when
You own a home with a payment that still leaves a healthy monthly surplus, and your emergency fund is intact.
Your next step
For education only. Not individual financial, tax or legal advice.