Renting with the goal of buying

If you are a renter hoping to make the leap into homeownership, make sure you are fully prepared for the financial commitments that come with owning a home.

If one day you aspire to be a homeowner, keep your long-term goals in mind. The transition from renting to buying is a big step that requires patience and lots of planning.

Here are three ways you can prepare to become a homeowner while renting.

  • stack of dollar bills

    Budget for your total expenses

    A monthly mortgage payment isn’t the only cost you’ll be responsible for when you purchase a home. Homeownership comes with both upfront and recurring costs. You’ll need to factor these costs in as you determine how much you’ll need to save.

    • Down payments typically range from 3-20% of the purchase price.

    • Closing costs typically range from 2-5% of the purchase price.

    • Moving expenses range from hundreds to thousands of dollars.

    • Homeowners Insurance & Property Taxes are recurring costs that vary widely from state-to-state and property-to-property.

  • checklist of items and a credit card

    Establish and maintain good credit

    Your credit is one of the most important factors lenders use when deciding if you qualify for a mortgage loan.

    • Start to build a credit history:
      • Open a free or low-cost checking or savings account.
      • Apply for a credit card and use it responsibly.
    • Make all your payments on time and in full.
    • Monitor your credit by checking your credit report annually.
  • piggy bank with a coin

    Make a spending and savings plan

    Once you determine how much you’ll need to save, create a spending and savings plan and stick to it.

    • Determine how much you need to save monthly to reach your goal.
    • Carefully track your income and all expenses.
    • Trim non-essentials.
    • Check in with your progress and stay on track.

Owning a home can provide you with the independence you've always wanted, but it's important to remember that homeownership comes with new responsibilities. When you think you are ready, talk to a housing counselor or industry professional to discuss your options.