When to buy a house

Buying a house is one of the biggest decisions in life, it’s traditional for Vietnamese people to settle down to start a business. Buying a home can offer a joyful and exciting prospect, but it’s also a huge choice, and there are many things prospective homeowners should consider before deciding to put down money.

Key Takeaways

  • Fall and winter are generally the best seasons to buy a house. Home prices and buyer competition are higher in spring and summer, and both tend to cool down in the fall.
  • There’s no “right age” to buy a house—there are homebuyers in age groups from 18 to 95.
  • Lenders look for financial readiness based on income reliability and consistent, timely bill payments.
  • When interest rates are low, taking time to improve your credit score may not always be necessary.
  • The “right time” to buy a house is when it makes the most financial sense to you.

Buying a house is one of the biggest decisions you’ll make, and because homeownership affects you for the rest of your life, making a commitment at the right time is key.

Market conditions, your age, and even the seasons can influence when you should buy a house, but ultimately, the right time to buy a house is when it makes the most financial sense for you. However, with so many variables at play, lining up everything perfectly can be difficult. Understanding these factors better can help you prioritize what matters to you—and your lender, if you’re financing.

The Best Time of Year To Buy a House

Unless you work in real estate, you probably wouldn’t know the connection between seasons and home prices. Home prices tend to rise and fall seasonally in line with home purchases. Prices and sales increase in the spring and summer, then taper off and drop in the fall and winter. Waiting until the weather cools off can help you get a better-priced home, if you can find one. Falling home sales in autumn means there are fewer homes available for purchase.

Note

While you’ll want to align your home purchase with the season in which prices and availability are in your favor, buying when you’re mentally and financially ready is most important.

The Best Age To Buy a House

There’s no right age for purchasing a home—although the typical first-time homebuyer is 33 years old according to the National Association of Realtors. The age you’re mentally and financially ready to purchase a home is the best age to buy, whether that’s age 20 or 70.

While debt payments and credit scores are common homebuying obstacles, there are benefits to buying when you’re young. You can start building equity—and wealth—earlier in life as you pay off your mortgage and your home appreciates. However, if there’s a high chance you could have to relocate within the next five years, you won’t want to lose equity by moving too soon.

Delaying your home purchase also gives you more time to add to your down payment and can also make your housing costs more affordable. If you have to wait to buy your first home, you won’t be alone. There are first-time homebuyers in all age groups, even ages 75 to 95.

When the Market Benefits Homebuyers

The housing market—and the larger economy—are important factors in purchasing a home. You’ll have a better chance of getting a good deal when there are more houses for sale than buyers looking for houses.

Historically, the months leading up to a recession tend to favor buyers. People are less willing to spend money overall, so there are fewer homebuyers and less competition for those who are looking. Interest rates tend to fall during recessions, which makes financing more affordable. Home prices also tend to fall during this type of market.

Note

Pay attention to home trends in the area you’re considering your home purchase. Local housing market trends don’t always follow the nationwide housing market.

When It Makes Financial Sense To Buy a House

Of all the factors, your personal finances have the biggest impact on purchasing a home, especially if you’re taking out a mortgage to finance your home. You’ll need to show the lender that you can afford to make your monthly payments.

Down Payment

You may not need as high of a down payment as you think. It is very attractive to have a bank that can lend you up to 100% of the value of the house. However, in order to be safe in terms of the amount of interest and principal to be paid every month, not to become house poor, or to have your house sealed due to insolvency, experts recommend that you accumulate at least a small amount of 30% of equity capital.

 Credit Score

When it comes to having the ideal credit score, Stuckey suggested weighing the rate you currently qualify for against the risk of rates increasing in the near future. Demonstrating consistent financial responsibility is most important. That means being on time with all bill payments, even those that aren’t regularly reported to the credit bureaus.

Make sure your credit score is good enough for you to get a good interest rate on your mortgage. Focus on building your credit score – it can save you a lot of money.

Debt-to-Income Ratio

Lenders use your debt-to-income ratio—the percentage of your income that goes toward debt repayment—to gauge how comfortable you’ll be with a mortgage payment. However, it can be tough for lenders to calculate your debt-to-income ratio if a large portion of your income relies on nontraditional sources.

“The mortgage industry doesn’t have all the tools in place to consider many of the popular income streams like Airbnb and YouTube services,” said Stuckey expert. Nontraditional income also includes things such as ridesharing, food and grocery delivery, pet-sitting, or profits from an e-commerce store.

Note

Having strong documentation can help you prove you can afford mortgage payments. Some lenders may request tax returns, bank statements, and profit and loss statements to verify your income.

Should You Buy a House Now?

Ultimately, the best time to buy a house is when it makes the most financial sense for you. Even at the right age and market conditions, you’ll still need to have a down payment, consistent and provable income, emergency savings, and a solid bill payment history.

Once your finances are in place, navigating the housing and lending markets are the next factors to consider. Are houses in your desired location reasonably priced? Ideally, interest rates are low enough that you can finance your dream home at an affordable monthly payment.

You don’t have to make the decisions on your own. Talking with a mortgage professional can help you weigh your options and determine whether buying now is in your favor. Delaying your purchase may be disappointing, but buying at the right time is best in the long run.

Buying a home is a big life decision and commitment, and you need to think deeply and carefully to make sure it’s done right. Financing is only one part of the decision to buy a home. In fact, you need to consider other factors in the future, determining the direction you want to take in life and career. Only when you are sure of the above, does owning a home become wonderful, useful, and bring you enjoyment in life, not a burden.

Frequently Asked Questions (FAQs)

What credit score do you need to buy a house?

Credit score requirements vary by lender and loan programs. You’ll typically need a high credit score for conventional loans, which are not part of a government program.

How much of a down payment do you need to buy a house?

Some loan programs don’t require a down payment, but these may have specific requirements, like location or income restrictions. While the median down payment among all buyers is 12%, at least 3% down payment is a good starting point.

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