I'm trying to figure out how close (or how far) I am from realistically being able to buy a home. I don't really have anyone in my family who understands personal finance or home buying, so I'm hoping to get some outside perspective.
Here's where I'm at financially:
- I take home about $900/week from my salaried job, so my income is very consistent.
- Part of my compensation is an annual bonus. It's performance-based, but it's paid every year and I'd expect at least $15,000 at a minimum.
- I don't have any credit card debt or personal loans. The only debt besides my truck is student loans, which are currently in deferment.
The biggest thing people will probably question is my truck payment, so here's the story.
About a year ago, while I was rebuilding my credit, I made a terrible financial decision and financed a vehicle at almost 29% interest, thinking I'd be able to refinance within 6-12 months. That never happened because I was so upside down on the loan. Fortunately, my credit improved enough that I was able to get out of that situation and buy a Toyota Tundra through my local credit union. The interest rate is 6.5%, which I know isn't amazing, but it was the best rate I could qualify for at the time. The payment is $702/month. It's a large payment, but it's affordable for me and my goal is to keep this truck for many years.
Outside of that, my monthly bills (utilities, insurance, internet, phones, etc.) are roughly $1,100/month.
Our rent is only $900/month, and honestly we got incredibly lucky. It's a decent 3-bedroom house, just older and outdated.
The problem is our family is growing. We currently have three kids, and we're expecting our fourth in October. We're simply running out of space.
Unfortunately, in my area, anything with 4+ bedrooms generally starts around $300k and goes well into the $400k range. It isn't necessarily an overpriced market—that's just where family-sized homes seem to be.
One bank told me I could probably qualify for around $350,000, but that honestly seems crazy to me. I can't make the math work in my head.
Personally, I've been thinking more along the lines of $250k, with $300k being an absolute ceiling if everything else made sense.
Career-wise, things are moving in a good direction. I expect my income to increase into roughly the $70k-$80k range within the next 6-12 months because of additional responsibilities and a likely promotion. That said, I'm intentionally not counting on that income when making this decision. I'd rather base everything on what I make today.
Credit-wise, I've come a long way. About a year ago I was around a 500 credit score. Today I'm around 620, and I expect it to continue improving. The last few collection accounts have already been settled and should finally fall off my reports around November. I also haven't had a late payment in well over a year.
So I guess my questions are:
- Am I actually ready to take on a mortgage?
- What should I be doing over the next 6-12 months to put myself in the best position?
- Is $250k realistic for my current financial situation?
- Would you wait until my credit improves further and those collections fall off?
- Is there anything I'm overlooking that first-time buyers commonly miss?
I'm trying to be responsible here. My parents struggled financially my entire childhood. They had poor credit, missed payments regularly, and there were years they took out loans just to afford Christmas presents. Because of that, I never really learned what healthy finances or responsible homeownership looked like.
I finally feel like my life is becoming stable. I'm established in my career, my credit is improving, and I feel like I'm headed in the right direction. I just don't want to make a mistake by buying too much house too soon.
I'd really appreciate any advice or perspective from people who have been through this.