3 Ways to Tell You’re Ready to Buy a New Home in Houston

“Is now a good time to buy a house?” That’s one of the questions I get most frequently as a Realtor® in Houston. There are so many great neighborhoods in this city, and so many benefits of homeownership—like tax deductions and home equity. It’s certainly no surprise that both renters and current homeowners are always interested to know when the best time to buy something new is.

The truth is, there is no “good time to buy” a home in Houston that’s the same for everyone. Sure, it’s better in the long run to buy when interest rates are lower, but that shouldn’t determine when you buy a new home. If you’re interested in upgrading your housing, it’s all about finding the right time to buy for you. 

So, how do you know when it’s a good time for YOU to buy a home in Houston? Whether you own your own home now or you’re renting, there are a few benchmarks that can tell you you’re ready to buy a new home. If you’re buying a home to live in, it’s highly likely that you’ll need help from a lender to close the deal. When I advise my real estate clients in Houston, the markers I tell them to focus on are the same indicators that will be used by a mortgage lender to determine whether or not they can give you approval for a loan. Without that approval, it becomes very difficult to buy a home in Houston. 

Related: Why Move to Houston

So, here are the top 3 ways to tell you’re ready to buy a home in Houston:

•  Your credit score is at least 640.

Everyone who is going to be listed on your mortgage needs to have a credit score of at least 640 to qualify for an FHA loan. Every mortgage program has its own minimum credit score requirements, and credit scores range from 300 to 850. A credit score of 640 falls into the “fair” range. With a 640 credit score or higher, you’ll meet the minimum requirements among the major mortgage programs. If your credit score is lower than 640, you may struggle to find a lender. You will be better off working to improve your credit than looking for a new home to buy.

• You have cash reserves of 6%–8% percent for down payment and closing costs.

Even with a loan, buying a home still requires some cash on hand. You’ll need to have a down payment ready as well as cash for closing costs that amount to somewhere between 6% and 8% of the home’s sale price. If you can’t prove you can pay those upfront costs just yet, you probably can’t afford the home you’re looking at and you’ll have trouble finding a lender.

• You have stable employment.

Even if you have a million dollars in the bank, lenders still want proof that you have stable employment before they will give you a mortgage loan in Houston. The reason why is pretty simple: Savings can disappear fast. You can lose a million dollars on a single bet in Las Vegas (I do NOT recommend betting on the Texans). Stable employment guarantees that you’ll have income that allows you to pay your mortgage. For this reason, it’s a good idea to have proof of employment before you start seriously looking for a house. 

Related: 10 Facts About FHA Loans You Might Not Know

Now, if you don’t meet these three qualifiers, it doesn’t mean there’s no way you can buy a home in Houston. It just means that it will be much, much more difficult. Most buyers need financing in order to purchase a home, and lenders do not lend money to people they aren’t convinced can pay them back. That’s why I only work with buyers who can meet these requirements. If you don’t meet these requirements yet, I can recommend a great lender that can provide you with the guidance and advice you need to get where you want to be for homeownership.

If you do meet these three criteria, congratulations, you’re ready to buy that house! If you aren’t sure where to look for a new home in Houston or how much a realistic budget might be, contact me today. As a licensed Realtor® and real estate broker in Houston, I help clients find a home in the city that will meet their needs, whether they’re ready to buy or rent. 

I look forward to hearing from you!