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Scorecard

Are You Ready to Buy a Home?

The National Association of Realtors First-Time Buyer Profile shows the typical first-time buyer puts down about 8% and the median home price-to-income ratio has risen to about 5x in recent years. Score your home-buying readiness across down payment, credit health, debt-to-income, job stability, emergency cushion, and local affordability to see whether you are ready now or which gap to close first.

Last updated: May 2026

A home-buying readiness score combines the dimensions mortgage underwriters and prudent buyers both look at: down payment, credit health, debt-to-income, job and income stability, post-closing reserves, and local affordability. Readiness = Weighted Sum (Down Payment + Credit + DTI + Job Stability + Reserves + Affordability). Typical first-time buyer down payment typically target 20%+.

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What is Home Buying Readiness Score?

A home-buying readiness score combines the dimensions mortgage underwriters and prudent buyers both look at: down payment, credit health, debt-to-income, job and income stability, post-closing reserves, and local affordability. The output is a 0 to 100 view of how prepared you are today and which gap to close first.

The Formula

Readiness = Weighted Sum (Down Payment + Credit + DTI + Job Stability + Reserves + Affordability)

Down payment, credit score, and DTI carry the heaviest weights because they are the underwriting decision drivers; reserves and affordability are the post-closing resilience drivers.

Worked Example

A first-time buyer with 6% saved for down payment, 690 credit score, 33% DTI, 4 years at the same employer, 4 months emergency fund, target home priced at 4.5x household income.

Down Payment: 5 (between 3% and 10%)
Credit Health: 7 (in the 680-740 band)
Debt-to-Income: 8 (under 36%)
Job and Income Stability: 9 (long tenure, fixed salary)
Emergency Cushion: 7 (4 months)
Local Affordability: 7 (within 3-5x band)

📌 Score around 72. The biggest opportunity is Down Payment; lifting to 10-20% removes PMI and improves the rate sheet. Otherwise readiness is solid; ask a lender for a pre-approval quote to confirm.

Why This Matters

Most rejected mortgages are predictable

CFPB data shows most mortgage application declines are driven by DTI above 43%, credit scores below 620, or insufficient documented income. Pre-screening the application via this readiness check surfaces those gaps before applying.

Post-closing reserves are underweighted

New homeowners frequently underestimate year-one repair and maintenance costs at roughly 1% of home value per year. A 3-6 month reserve covering the new payment plus essentials is the resilience layer that prevents debt accumulation in year one.

Common Mistakes

❌ Counting down payment as readiness on its own

A 20% down payment plus a 45% DTI plus a 600 credit score still produces a poor mortgage outcome. The categories work together; one strong leg does not substitute for the others.

❌ Stretching to a 5-7x price-to-income home

Above 5x household income, the carrying cost (PITI plus maintenance) usually consumes too much of the monthly budget to leave room for other goals. The 3-5x band is the broadly sustainable range.

Industry Benchmarks

Category	Good	Average	Poor
Typical first-time buyer down payment	20%+	~8% (NAR)	Below 3%
Best-pricing credit score tier	740+	680-740	Below 620
DTI underwriting comfort band	Below 36%	36-43%	Above 43%

Source: CFPB Mortgage Origination Data and National Association of Realtors First-Time Buyer Profile

Benchmark data sourced from CFPB Mortgage Origination Data and National Association of Realtors First-Time Buyer Profile.

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One of the most common mistakes we see when working with clients: counting down payment as readiness on its own. A 20% down payment plus a 45% DTI plus a 600 credit score still produces a poor mortgage outcome. The categories work together; one strong leg does not substitute for the others.

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Frequently Asked Questions

What credit score do I need to buy a house?

FHA loans typically require a 580 minimum (or 500 with 10% down), while conventional loans usually require 620 minimum. The best mortgage pricing tier sits at 740 and above. A score in the 680-740 band qualifies for most programs at workable rates; below 620 sharply limits options and raises long-term cost.

How much should I have saved before buying a house?

A workable target is the down payment (3-20% of price), closing costs (2-5%), and a post-closing reserve of at least 3-6 months of the new mortgage payment plus essential expenses. Without that reserve, the first unexpected repair or income disruption can force borrowing in year one.

What does debt-to-income mean for a mortgage application?

Debt-to-income (DTI) is your total monthly debt payments divided by your gross monthly income. Most lenders prefer a DTI below 36% for the best mortgage terms; many programs cap underwriting at 43%. Paying down or refinancing other debt before applying often moves applicants from declined to approved.

Is the price-to-income ratio a good affordability check?

It is a useful sanity check rather than a precise rule. A home price 3-5x your annual household income is the broadly sustainable band; above 5x usually means a strained budget once full carrying cost (PITI plus 1% of price annually for maintenance) is included. Local markets vary, so combine this with a full monthly-budget check.

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