Before you talk to an agent, before you talk to a lender, before you spend a single hour on Zillow — answer three honest questions.
1. Will you be in the home five years or longer?
Buying costs about 8% of the home value round-trip in transaction fees. If you sell inside three years, those fees usually outweigh the equity you've built. Five years is the rough breakeven in 2026 California for most price points — sometimes longer in flat or declining markets.
The honest version of "are you ready to buy" is: are you ready to stay put? Job stability, family planning, geographic certainty. If any of those are shaky, keep renting and invest the difference.
2. Do you have the down payment and three months of reserves?
The down payment is the obvious number — typically 3.5% (FHA), 5% (conventional), or 20%+ to skip mortgage insurance. The number that ruins buyers is the reserves — lenders want to see 2-6 months of total payments sitting in cash after you close.
Add: closing costs (1.5–3% of purchase price), the first round of furniture you'll inevitably need, and the appliance that breaks within 90 days because they always do.
3. Is your DTI (debt-to-income) under 43%?
Add up your total monthly debt payments — student loans, car notes, credit card minimums, the future mortgage payment. Divide by your gross monthly income.
- Under 36% — green light. Lenders compete for you.
- 36–43% — yellow light. Doable but you'll get fewer loan options and slightly worse rates.
- Over 43% — red light. Most conventional lenders won't underwrite. Pay down debt before applying.
The honest "not yet" signs
You're not ready if any of these are true today:
- You can't comfortably name your monthly take-home after taxes
- You've been at your job less than a year (lenders want 2 years stable income, with exceptions)
- You have less than 90 days of housing payments saved beyond the down payment
- You haven't talked to your partner about the geographic 5-year commitment
None of these are dealbreakers forever — they're just signals that "ready" is six months out, not today. Use that time well.
Next step
Run the rent-vs-buy calculator for your situation. If buying wins on a 5-year horizon, move to lesson 2: getting pre-approved without surprises.