Should I Buy a House? How to Tell If You’re Ready

Buying a house is one of the most significant financial decisions you'll ever make. But beyond altering your financial picture, buying your first home also represents a substantial lifestyle change for most people. In terms of the effect on your day-to-day, homeownership is right up there with finishing school or having a child.

If you're wondering whether you're ready to buy a house, here's a cheat sheet showing what you might factor into the decision. In some cases, all you need to do is run the numbers; others may require some soul searching. Once you've gone through this list, you'll have a better idea of whether you're ready to buy a house.

» MORE: How to buy a house, step by step

You should feel good about buying a house if …

Let's start with five signs you might be ready to buy. Of course, this isn't a checklist or a quiz, so it's not like all five are must-haves. But if these sound like you, you may already have started down the path to homeownership.

You've got a steady income

Whether you're self-employed, work a 9-to-5 or have some combination of the two, you've got money regularly coming in. That's important for obvious reasons, like paying your bills, but also for getting a home loan. Your income is one way mortgage lenders gauge whether you'll repay the loan.

Lack of steady employment or an incomplete employment history make it harder to qualify for a mortgage. Most mortgage lenders will request documentation showing an employment history of at least two years.

» MORE: Getting a mortgage without a perfect two-year work history

You have solid plans for the immediate future

Buying a house is a commitment; if you decide the place isn't working out for you, selling a home is much more involved and expensive than, say, breaking an apartment lease. You want a place where you'll be comfortable now but also one that could meet your future needs. For example, if you know you want kids, it could make more sense to shop for a three-bedroom home now instead of struggling to sell your starter home and upgrade when you've got a toddler (or two) underfoot.

You've built up savings for a down payment

Saving up for a down payment is one of the biggest hurdles on the path to homeownership. But contrary to popular belief, you don't have to put down 20%. Depending on the type of home loan you're using, the typical down payment on a house is usually 3% to 10% of the purchase price. And home loans with no down payment are available, too.

You’ll also need money for closing costs. Those will run about 2% to 5% of the total price. Having savings socked away puts you much closer to homeownership.

» MORE: How much does it cost to buy a house?