When Is the Right Time to Buy a House?

Sarah Woodbury Sarah Woodbury / Published Mar 31, 2020, 5:00 AM

A servicemember and his wife and daughter stand in front of their first home holding their new keys

When it comes to buying a home with a VA loan, timing is everything. But how do you know when the time is right? Is there a fairy of homebuying that will tap her wand three times when everything's set?

Though we would all love some home buying wand-waving, it's not quite that simple. However, there are some pretty straightforward signs that indicate you might be ready to start getting that home loan.

Your Finances Can Support a Home Loan

Graphic listing the 5 financial things you need to consider before getting a mortgagePerhaps the most important thing to consider is whether or not you have the resources to afford a VA home loan. The following are some costs you'll want to be prepared for:

  • Monthly Payment – You'll need a reliable income that can support a monthly mortgage payment. Many borrowers have to budget carefully to make sure they're on top of their payments.
  • VA Funding Fee – This fee, which is typically 1.4–3.6% of the loan amount, is a one-time payment that most veterans are required to pay. However, you do have the option to roll it into the overall loan amount.
  • Down Payment – Though a VA loan doesn't require a down payment, if you can put some money down if you want. Even just 5 or 10% can get you a lower funding fee percentage.
  • Reserves – Having cash reserves is a great idea in case of an emergency. You'll want to have enough to cover at least 2–3 months' worth of expenses.
  • Closing Costs – Don't forget about closing costs, which normally equal 3–5% of the loan amount. You may be able to negotiate with the seller to have them pay some of these costs. Or you can also roll them in to your VA loan amount.

You've Got Good Credit & Other Qualifications

Having a good credit history, especially your recent history, will play a big role in determining whether or not you can get approved for a home loan. In addition, your credit score will affect the rate you can qualify for.

Other factors that affect your application being approved or denied include your debt-to-income (DTI) ratio, employment history, and a variety of other qualifications.

The Market & Rates Are Favorable

Though it's impossible to predict how the market and rates will do in the future, there are a few things you can consider when thinking about starting the home loan process:

  • Rates – National rates change all the time. Keeping an eye on current rates as well as expert predictions for future rates isn't a bad idea.
  • The Current Housing Market – A buyer's market means that lots of homes are being sold, but there aren't a whole lot of buyers going for them. Buying during a buyer's market can help you get a better price on the home you're looking for.

You're Ready to Settle Down

A couple & their daughter are moving into their new homeIn addition to being ready to take on the responsibility of large monthly home loan payments and maintaining a home, you also need to be ready to stay in one place for a while.

In order for a mortgage to be worth it, financially, you usually want to be able to start getting back equity in the home. Typically this takes at least 5 years, if not longer.

So, before you buy a home, really decide if you're ready to settle down for that amount of time.

The Advantages Outweigh the Disadvantages

Before deciding whether to buy a home, think about the advantages vs. disadvantages of homebuying. For example, you may gain a feeling of security or community by buying a home, but you'll also have less freedom to relocate.

Depending on your values, it may or may not be the right time for you.

Keep in Mind . . .

If you don't match the above criteria but you want to buy a home, you've still got options.

Remember that VA home loans are much easier to qualify for than other loans. You don't have to make a down payment or pay for mortgage insurance, plus closing costs can be paid by the seller.

Still have questions? Our experts at Low VA Rates can give you advice catered to your situation. Give us a call at 866-569-8272 to speak to a mortgage professional today.