Chapter 1: Are you ready to buy?
A 30-year mortgage costs about 6.55% in June 2026, and if you ask the internet whether you should buy a house, the conversation reaches that number within three sentences. Rates matter, and this chapter does the rate math honestly. But two quieter questions decide far more of the outcome: how long you will stay, and whether your financial base can absorb the purchase. Buyers who get those two right survive a mediocre rate. Buyers who get them wrong lose money at any rate.
The two questions that outrank rates
Start with time. Buying a home and later selling it costs roughly 8–10% of its value in commissions and transaction costs, the full round trip. On a $400,000 home that is $32,000 to $40,000, paid whether or not the house worked out. Meanwhile, national home prices rose 3.26% between the third quarter of 2024 and the third quarter of 2025 (FHFA's house price index), so a fair planning assumption is about 3% growth a year, roughly $12,000 a year on that same house. Divide one number by the other and the conclusion writes itself: typical appreciation needs about three years just to cover the round-trip toll, and early mortgage payments are mostly interest on top of that (Chapter 6 shows why). Stay two years or less and you will probably sell at a loss even in a rising market. Stay five or more and the toll spreads thin enough to stop steering the decision.
The second question is about your base. A home is the largest and least liquid thing most people ever buy, and it arrives with a roof, a furnace, and a property tax bill. The purchase works only if your finances can take the hit without going fragile: income you reasonably expect to continue, debts that are under control, and reserves, the cash cushion of 3–6 months of essential expenses that the Personal Finance Guide, Chapter 6 builds. The version of that test that matters here has three extra words: reserves intact after closing. Plenty of buyers have a healthy reserve on the day they start shopping and an empty one on the day they get keys. A house plus an empty reserve is one water heater away from a credit card balance.
The readiness scorecard
Six lines, each one checkable in an evening. Green means true today, not true someday.
- Stable income. You can reasonably see the next two years: same job, same field, or a contract pipeline you trust.
- Horizon. You expect to stay at least 2 years, and ideally 5 or more, in the same city and the same size of life.
- Reserves intact after closing. Subtract the down payment and 2–5% closing costs from your cash; at least 3 months of essential expenses must remain.
- Debt under control. No credit card balance that grows month over month, and total payments low enough to pass Chapter 3's math with room to spare.
- Credit score positioned. 740 or higher earns the best conventional pricing; below 700, six months of repair often beats buying now.
- You know your monthly budget. You can name your real monthly surplus without opening an app, because that surplus becomes the house payment's fuel.
Two of those lines deserve a closer look, because they are the two people most often wave away.
The reserve line has a specific failure mode. The down payment gets all the planning, closing costs get discovered late (2–5% of the price, so $8,000 to $20,000 on a $400,000 home, itemized in Chapter 11), and the reserve quietly becomes the gap filler. Lenders sometimes require leftover reserves and sometimes do not. Require them of yourself either way.
The credit line is worth real money, and it is movable. Mortgage pricing steps in bands of roughly 20 points, and the gap between a 715 score and a 745 score can be around a quarter percent in rate, which is about $59 a month on a $360,000 loan. Six months of on-time payments, balances paid before the statement date, and no new accounts will often move a score 20 to 40 points. Chapter 7 shows how the bands turn into quotes.
Every line on the scorecard can be fixed with six patient months. None of them can be fixed after closing. If two or more lines are red, the strongest move in home buying is to wait, on purpose, with a date to retest.
The timing trap: waiting for lower rates
Housing economists expect rates to stay above 6% for most of 2026, with year-end forecasts near 5.9% (Bankrate tracks the dailies). That tempts a plan you will hear at every barbecue: wait for the drop, then buy. The plan sounds careful. The math says it usually trades a small win for a large cost, so walk it slowly on a $400,000 house with 10% down.
| Buy now | Wait a year, rates hit 5.9% | Wait a year, rates stay 6.55% | |
|---|---|---|---|
| Price after ~3% growth | $400,000 | $412,000 | $412,000 |
| Down payment (10%) | $40,000 | $41,200 | $41,200 |
| Loan | $360,000 | $370,800 | $370,800 |
| Monthly principal and interest | $2,287 | $2,199 | $2,356 |
| Rent paid while waiting ($2,200/mo) | $0 | $26,400 | $26,400 |
If the forecast lands perfectly, waiting wins an $88 smaller payment. The fee for that win: $26,400 of rent during the wait, $1,200 more cash down, and a loan that starts $10,800 larger because the price grew while you watched. The rate drop saves real money ($152 a month if the price had stayed frozen), but prices do not stay frozen for you. The drop has to outrun the growth, and at roughly 3% growth on $400,000, the growth bill is about $12,000 a year.
Now run the version barbecue advice skips. Buy at 6.55% today, and if 5.9% actually arrives next year, refinance: replace your loan with a new one at the lower rate. Your balance after a year of payments is about $356,000, and a new 30-year loan at 5.9% costs about $2,112 a month. That beats the waiter's $2,199, because you locked the $400,000 price and then took the same rate the waiter waited for. Refinancing has its own closing costs, typically a few thousand dollars, and Chapter 13 does that breakeven honestly, but the asymmetry stands: you can refinance a rate later, and you can never re-buy last year's price.
The third column is the one to respect most. The 5.9% figure is a forecast, and forecasts about rates miss often, in both directions. If rates simply hold at 6.55%, the waiter pays $2,356 a month for the same house you could have carried at $2,287, plus the year of rent. Run your own numbers, with your own rent and your own market's growth, before trusting anyone's crystal ball:
Agents love the slogan "marry the house, date the rate." Half of it is sound: rates are changeable later and prices are not. The other half gets people hurt, because it is used to excuse payments that only work in an imagined future. If the payment fits your budget today, at today's 6.55%, the slogan is fine. If the payment only works at the forecast rate, you cannot afford the house, and no slogan changes that.
Buy when the full payment works at today's rate and the scorecard is green. Treat a future refinance as a bonus, never as the plan that makes the numbers fit.
When waiting is the strong move
Renting is not failure, and this guide will never treat it as one. Rent buys shelter plus flexibility, and in three situations that flexibility is worth more than any rate or any price:
- A short or fuzzy horizon. A possible move, a relationship in motion, a career that could relocate you: under roughly five years, the 8–10% round-trip toll eats the math, as Chapter 2 shows in full.
- Unstable income. A mortgage is a 30-year promise made with next year's paycheck. If next year's paycheck is a guess, keep the lease, which is a 12-month promise.
- A reserve that would not survive closing. Draining the cushion to buy converts a safe renter into a fragile owner. Six more months of saving is cheaper than one emergency on a credit card at 24%.
In each case the move is the same: rent on purpose, automate the saving, and put a retest date on the calendar. That is a strategy, not a consolation prize.
Jamie earns $90,000, cleared the credit cards back in the Personal Finance Guide, and runs a $710 monthly surplus on autopilot. The scorecard reads four green, two amber. Green: steady job (three years in), a 5+ year horizon, debts handled, budget known to the dollar. Amber one: after a 10% down payment and closing costs on a roughly $400,000 home, the reserve would shrink to about five weeks of expenses. Amber two: a 715 credit score, one band below the 740+ pricing tier, which is worth about $59 a month on the loan Jamie has in mind. The plan: six more months of the $710 autopilot rebuilds the cushion, balances paid before the statement date push the score over 740, and no new accounts in between. Jamie keeps renting, on purpose, with a retest date in December.
Key takeaways
- Two questions outrank rates: your horizon (2 years minimum, 5+ is comfortable, because the buy-sell round trip costs 8–10% of the home's value) and your base (stable income, controlled debt, reserves that survive closing).
- Waiting a year for a forecast 5.9% rate on a $400,000 home saves about $88 a month if the forecast is right, and costs about $26,400 of rent plus a $12,000 higher price either way. Buying at 6.55% and refinancing if 5.9% arrives beats waiting in both directions.
- Rate forecasts are forecasts. The only payment that counts is the one that fits your budget at today's rate.
- Renting is the strong move when the horizon is short, income is shaky, or closing would drain the reserve. Rent on purpose, fix the weak scorecard line, and retest in 3–6 months.
Sources: Bankrate: Current Mortgage Rates · CFPB: Buying a House · The Finvest Personal Finance Guide