Are you currently renting and considering the idea of making a home purchase? Buying a home is a significant milestone and investment for your future, but it’s just as important to make this move when you’re ready. If you’re contemplating this decision, here are five signs you may be ready to stop renting and start buying.
You have enough saved for a down payment.
Having a down payment of 5% to 20% set aside is a great starting point. If you happen to be a first-time home buyer, you may also be eligible for a series of government incentives to help with your down payment if that interests you. Keep in mind that saving for the down payment is one part of the purchase, there are other costs to consider as well. So all of your savings shouldn’t be earmarked for the down payment.
You can afford the costs of a purchase.
While having a down payment is essential, understanding your home affordability will indicate whether buying is the right choice for you. It’s important to get clear insight on what you can afford so you can enter this process with realistic expectations. You can do this by getting pre-approved to get the best idea of your affordability and what your monthly payments will be. Pre-approval will give you a good indication on exactly what you’re eligible to borrow, resulting in a more efficient and realistic home search down the line.
You have a steady source of income with low debt and good credit.
If you have permanent employment, steady income, a strong credit score and low debt – these are all good indicators that you’re ready to buy a home. These factors are among the primary requirements that lenders consider to determine your eligibility for a mortgage. More often than not, lenders favour borrowers with credit scores of 680 or higher. If your credit is slightly lower in the 620 to 670 range, you’re still in good shape to move forward. That’s why at Homewise, we work with over 30 banks and lenders including monoline lenders and credit unions to help you get the best mortgage based on your unique situation.
You have a consistent savings plan.
If you’re conscious of your spending and save money consistently, you’re on the right track to transition as a renter to a homeowner. Having a strong savings plan is a good sign that you’re ready to buy a home and the responsibility that comes with it. This reinforces that you’re prepared to make a down payment and have the financial backing to keep up with other household costs and manage unforeseen expenses.
You are outgrowing your current space and want to settle down.
If you’re planning to start a family or you're simply looking for a more stable living situation (and you meet many of the above qualifications), this is a good sign that you may be ready to buy. Whether you need more space, want to settle down in a particular neighborhood, or want to make a long-term investment, making a home purchase provides stability and the benefit of having an asset that grows over time.
If making the transition from renting to buying is something you’re interested in doing, it is a great idea to get pre-approved to have the best idea of your affordability and mortgage options. With Homewise you can apply in just five minutes then one of our dedicated Mortgage Advisors will guide you at every step of the process and work to find you the best mortgage options available that meet your specific needs.