For years, home ownership has been considered the American dream. Before you take on this huge responsibility, you should assess whether you’re ready for that dream to come true. As much as you may want to purchase a home, the truth may be that you simply can’t handle the financial responsibility. It’s better to wait to buy a home, than to get one you can’t afford.

Do you plan to move soon?

Home ownership makes the most sense for people who plan to live in their homes for more than five years. That’s because during the first few years of your mortgage loan, you’ll only be paying interest. You won’t have gained enough equity in your home until you’ve been paying for several years. If you happen to make some money off a home sale within the first couple of years, you may owe capital gains taxes on the profit.

Renting is way cheaper.

If what you’re paying in rent is 35% less than what your mortgage would be, then it’s often wiser to continue renting. But if your monthly rent is on par with a monthly ownership costs, then you may be able to handle home ownership. Remember that monthly home costs include mortgage, property taxes, homeowner’s insurance, and often homeowner’s association fees.

You can’t pay off your past due bills.

Before you take on a mortgage, you need to take care of your past due debts. Otherwise you won’t get approved for a mortgage. If you did get approved, your interest rate wouldn’t be so great. Chances are, if you can’t afford to pay off your debts, you won’t be able to afford the extra costs that come with home ownership.

You haven’t been at your current job more than three years.

Mortgage lenders want you to have consistent, reliable income before they’ll give you a mortgage loan. If you’ve been job-hopping the last few years, you may not have the stability you need to keep up with a mortgage payment. The same thing goes if you’ve recently made the transition to self-employment. If you have your own business, lenders generally want to see three years of tax returns to verify your income.

You haven’t done any research.

If you simply wake up one day and decide to go house shopping, you’re asking for trouble. There are so many ins and outs to the home buying and mortgage borrowing process, that you’ll need at least a few weeks to get acquainted with the process. Don’t rely on your mortgage lender, real estate agent, or mortgage broker to tell you what you need to do. Use the internet and library to get information about mortgages so you make the right decision.

Little or No Down Payment Necessary

A time existed that you couldn’t get a mortgage without at least a 20% down payment. While some lenders have returned to that time, many lenders can arrange 100% mortgage financing. You can even buy a home with 2%-5% down payment. Something is always better than nothing.