The audio version of this post can be found here.

I hear from friends, family, and coaching clients all the time that homeownership is their top financial priority. I’ve been asked about this more than I’ve been asked about cleaning up debt or negotiating a raise – and although investing and retirement are a close second, nothing seems to top the romantic appeal of buying your very own home. 

First, let me say: I get it. I’ve been there. And my own rocky experience with homeownership is why I’m absurdly, crazily passionate about helping you buy a house… when the time is right. 

Please travel back in time with me for a moment. Imagine Jennifer in early 2007, just a wee baby Air Force lieutenant arriving at my first permanent duty station in Florida. After packing up my belongings over and over again to move every few months to a new room during college and military training, and after lots of moves in my childhood (with parents who weren’t afraid to buy — and flip — houses)… I was eager to put down roots. 

At the time, the conventional wisdom was that real estate was always a great investment that went up in value. A handful of older officers had shared their strategy of buying a house and then, after the military moved them away, converting it to an income-generating rental property. What’s not to love about that? I get a sense of permanence AND a meal ticket down the road? Sign me up. 

I also, it must be said, had absolutely no idea how to find an apartment to rent. For some reason, buying a house seemed easier. (In retrospect, this does not make a whole lot of sense. What can I say? I was young!)

My banking institution was only too happy to connect me with their mortgage department and made the process as painless as possible. As I said above, it was early 2007, so it was extremely painless. I wasn’t applying for a NINJA loan (“no income, no job, no assets”), but I might as well have been. I wasn’t able to afford a full down payment; to avoid PMI (more on that later), I was advised to take a second mortgage – 80% in the first mortgage, 15% in an 8% interest second mortgage, 5% down. I bought a crappy little house on a crappy little street for $155,000.

Then, the housing bubble popped. 

My crappy little house was underwater.  I moved out in 2011 and held onto it for another four years, hoping to recoup some of the lost value, which bottomed out in 2012 at just over $100k. I was a long-distance landlady living in Japan and California, collecting almost enough rent to cover the mortgage payment (if it was occupied), and it was a nightmare. A literal, actual waking nightmare, filled with emails containing phrases like “holes punched in walls” and “toilets full of maggots.” (This shall be the subject of a future post.) 

In 2015, I sold the crappy little house for $123,900, and I wasn’t even sad to see it go. 

“But Jennifer,” I can hear you thinking, “I’m not a dumb 23-year-old. I watched AND read The Big Short. No offense, but I think I’ve got this.” 

So, you are definitely smarter than I was – for starters, here you are, reading a personal finance blog! I was definitely not doing that! And hopefully, we’re all a bit smarter than we were back in 2007. But if you’ve read this far and you haven’t bought a house yet, please hear me out a little longer about five things that are not signs that this is the right time: 

1. “The markets are hot! Homes are selling lightning-fast! And I don’t want to be outbid AGAIN.” Yes. The markets are super hot. What this means is that right now sellers can get away with murder. (Possibly actual murder. People are so house-hungry in Charlotte right now that I think a seller could leave a dead body in the middle of the living room and the buyer would just eagerly offer to waive cleaning fees.) People are skipping inspections left and right, waiving repairs, and still losing out to all-cash buyers in crazy bidding wars. 
   
   So let’s say you land a house. You move in and find out a year later that the sellers concealed some pretty serious water damage. You find out when you discover a tiny, noxious pink mushroom growing in the corner of your frequently-cleaned master bathroom shower. Now you have to gut the bathroom and pay for toxic black mold eradication. (I’m not making that example up. That happened to us in our current house, which we bought after a full round of inspections in 2015, before the market got really wild.) We found additional concealed water damage on the exterior, pointed out by a friendly woodpecker who was helpfully drilling holes through our fascia to get to the bugs thriving in the rotten wood underneath. Because of the extent of the damage and a discontinued materials snafu, the cost of the exterior repairs quadrupled from the original estimate of $2K to $8k. And this was before we even started on the bathroom! 

2. “Interest rates are SO LOW though. And housing prices keep going up!” Interest rates are low right now, which can save you money in the long run. But all that long-term money will do you absolutely no good if your financial situation isn’t prepared for homeownership now. (More on that in a minute.) As for housing prices… Where have I heard that before?… oh yeah. 2007. Housing prices aren’t guaranteed to go up. 
   
   “But Jennifer, the collapse of the financial system was a once-in-a-lifetime black swan event!” 
   
   Yeah? Like… the global pandemic that still isn’t over? The one that temporarily redefined the word “unprecedented”? 
   
   Look, if you’re here reading my stuff, I care about you (yes, you. I mean it. I’m really glad you are here!), and I want you to feel financially and emotionally secure… even when the world turns upside down. 

3. “Homeownership is going to be cheaper than continuing to rent,” or its close cousin, “Locking in a mortgage will stabilize my monthly housing costs.” A mortgage payment can be lower than rent in some cases, and a fixed-rate mortgage payment will theoretically stay about the same… but your mortgage payment isn’t the full picture. In practice, renting a place to live means paying someone else to deal with the big-picture problems, like a new HVAC (around $7k) or roof (at least $5K, possibly way more) or HOA/COA/tax/insurance increases (who the heck knows). As a homeowner, you are on the hook to pay for everything that goes wrong. This means your actual housing costs may be anything but stable.  
   
   I empathize deeply if you feel like you’re throwing away money on rent, and you’d like to build equity in a house instead. The American wealth-building model sells homeownership as the key to amassing your personal fortune, and tends to stigmatize long-term renting outside of major urban areas. That’s a hard message to fight. Or maybe you’re tired of feeling like your landlord has the power, or you’re exhausted from fighting with your property manager to get a freakin’ handyman out to the house already. Your feelings are all completely valid. 
   
   But if you can, try to reframe the issue a little: in the short- and medium-term, rent is money that you pay to insulate you against major risks and hassles that could put you in serious financial jeopardy. This frees up income and headspace for you to fully stabilize your financial life and achieve homeownership from a position of security. 

4. “I can afford to buy because my long-term partner/family member/friend wants to buy it with me.” This is an Unpopular Opinion, but I am on Team Don’t-Buy-A-House-Together-If-You’re-Not-Married. This has nothing to do with prudery – shack up all you like, you crazy kids! Nope, this one is rooted firmly in my years of experience as a mortgage investigator. I’m not some starry-eyed idealist who thinks that a certificate of marriage means that everything works out fine — it’s just… real estate is a long-term purchase. When you mix that with friendships, family relationships, or non-marital partnerships, all parties are left WAY too legally vulnerable if things go wrong.
   
   Married couples have clear legal protections for dividing the property and determining who is responsible for debts if divorce or death comes into the picture, and it can still be a financial catastrophe for one or both parties. Those protections don’t automatically exist for non-marital relationships. (You can contractually create protections for the possibility of dispute, separation, and death, and you should consider doing so – even if you already bought a place.) No matter how much you might trust and love your friend, family, or partner, things may change, and I want you to be protected. 

5. “I’ve been watching a lot of HGTV and I want to try flipping houses for fun and profit.” Unless you’re a qualified and experienced contractor or a seriously accomplished self-renovator, this ain’t a rookie’s game. You, a first time remodeler, might think you did a fantastic job redoing your kitchen or rewiring gorgeous new light fixtures. But if you sell the house and the home inspector says you’re not up to code, you’ll be out the time and money you spent on the project and the money you’ll have to pay a licensed professional to fix it.  

But… I really want a house.

Before you think I’m anti-home-buying… I’m not. Not even a little bit. If you want to buy a house, I want you to have a house. And I want you to LOVE it. Homeownership can also be an excellent part of a plan to build wealth — if you do it right.

We own our current house free and clear. I freaking love walking outside in my bare feet and knowing I own every single blade of grass under my toes and every tree over my head, but I wouldn’t be here if I hadn’t followed a few rules. Here are six things that mean it might actually be a great time for you to buy a house:

1. “I have a reliable source of income that covers my expenses.” This one should probably go without saying, but mortgage companies are more careful than they used to be. (This should also go without saying, but… don’t lie on your mortgage application. Besides causing fun legal problems, it can jeopardize your ability to get loans or banking services in the future.) As noted above, buying a house isn’t a guarantee that your housing-related costs will remain stable, so if you’re already having a hard time making ends meet, you may wind up seriously stressed. Moving and furnishing a new place is pricey, too. And so is fixing all the little repairs that the sellers were too cheap to do correctly, if they did them at all. You want to be able to pay for that stuff, right?  

2. “I plan to stay put for at least five years.” Buying a home incurs a lot of up-front costs. The more years over which you can average those costs, the less of a hit you take when you decide to sell. 

3. “I have a 3-6 month emergency fund.” If you don’t have an emergency fund, those hypothetical repairs that you might have overlooked or waived because the markets are so hot right now are going to lead to more stress, and potentially more debt. Especially because the construction industry is also running hot, and materials costs are crazy high and in short supply. When we think of doing some work on a house, some of us think of farmhouse sinks and heated bathroom floors, but we might instead be stuck with deeply unsexy things like failed sump pumps and rotting fascia. Plenty of home repairs are non-negotiable, can’t wait, and aren’t covered by insurance or a home warranty. I want you to be fully insulated against this unpredictable misery so if stuff like that happens, you can just roll your eyes and pay.
   
   With my first house, I didn’t even know what an emergency fund was, and I thank the stars that my poor overworked HVAC didn’t die in the Florida heat because I do not know how I would have paid for it. The second time, Mr. Fortuna and I had a fully funded emergency fund, which we somehow still didn’t touch even when we had to repair all that shady water damage. (Which raises the question, what do we even think our emergency fund is for? But that’s a topic for a future post.)

4. “I have no debt.” This you? It sure wasn’t me in 2007. I had a $30K unsecured loan, the payments for which took a consistent $500 chomp out of my monthly income.  Between my mortgage and my loan payment, I had a few months where I definitely found myself floating expenses on my credit card from payday to payday. If I hadn’t deployed three times during those years (boosting my income while curtailing my spending), I would have built up serious credit card debt. 
   
   The second time around, Mr. Fortuna and I were completely debt-free. Even with childcare costs, we had way more breathing room… which ultimately allowed us to start paying extra on our mortgage and get free of it in just four years.

5. “I can afford at least a 20% down payment.” If you can’t pony up 20%, you have to get this stupid thing called PMI, or “private mortgage insurance.” This is you paying for the bank to buy insurance on you in case you default on the loan. In other words, it doesn’t protect you at all, it just protects the bank, who still gets to foreclose on you anyway. Jerks. 
   
   The banks are much happier to work with you if you pony up a nice healthy down payment first. Once you’ve paid 20% of the home’s value (or if your home’s value appreciates so the mortgage is less than 80% of the new value), you can work with your lender to get rid of PMI, but even then, you have to pay additional closing costs and/or appraising fees. It’s just… not great. A little patience here can save you big money. 

6. “The full mortgage payment for the kind of house I want is less than 30% of my monthly take-home pay.” First of all, and I think I almost don’t have to say it anymore but in case you were sitting in the cheap seats during the financial collapse of 2008: get a fixed-rate mortgage. Adjustable rates and balloon payments are for SUCKERS (and contributed to the mortgage crisis). FIXED RATE ONLY.
   
   “But what if I know I’m going to sell or refinance before the balloo-” ZIP IT.
   
   Second, the total payment should be less than 30% of your take-home pay for the full “PITI” – principal, interest, taxes, and homeowner’s insurance. The official Dave Ramsey line is that your mortgage payment should be less than 25% of your take-home pay, but millennials get really mad at me when I say that, so I’ve added a little fudge factor to acknowledge the realities of our times. I would love to be able to grant an “I live in an expensive area and that’s just not realistic for my current salary” waiver, but I haven’t found a way to justify it yet. To my mind, living in an expensive area with a salary that currently falls short of your desired standard of living makes it much more important that you follow this rule, and not less. (You may need to figure out how to grow your income – and Fortuna can help with that!)
   
   If I were the boss of your money, I would also want you to get the absolute shortest term you can afford while keeping your payment under 30%. I’m against long mortgages because you pay an astronomical amount of front-loaded interest for the privilege of borrowing money from the bank. That interest could instead be money that you pile up in your retirement fund, where it multiplies into your comfort and security way down the road (or you could just buy yourself treats, or give it away to charity, or light it on fire; whatever you want to do, really, it’s your money). Just do your best on this one; every little bit you shorten your mortgage term will save you serious long-term money. 

Ok. Wow, that was a lot.

You may be feeling some kind of way after you read this.

Maybe you still really want a house deep in your bones. Maybe you still have a lot of debt and put no money down on a house you just bought with somebody you’re not married to. Maybe you broke ALL the rules and you’re doing completely great and would like to tell me where I can put my advice.

Friends, that is a-ok.  

Your financial life is just one part of your emotional well-being, and this is a judgement-free zone. I’m always going to tell you what I think the ideal course of action would be and why, but Fortuna is a safe place where grownups get to make their own decisions. I will meet you where you are. And if for any reason where you are isn’t as peaceful or empowered or abundant as you want it to be, I’m ready to help you understand your finances and co-create a plan to achieve your money goals.

If that sounds like the kind of support you want more of in your life, hit me up. 

The product links in this post are affiliate links. If you choose to make a purchase through the links, the price is the same for you, and Fortuna will a) get a small commission from Amazon’s Affiliate program and b) be super grateful for your click!