When To Buy a House

Your age, the season, and interest rates can help you decide

Couple looking at a home with real estate agent
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Sturti / Getty Images

Buying a house is one of the biggest decisions you'll make, and because homeownership affects you for the rest of your life, making a commitment at the right time is key.

Market conditions, financial stability, and even your age can influence when you should buy a house. With so many variables at play, lining up everything perfectly can be difficult. Understanding these factors better can help you prioritize what matters to you—and your lender, if you're financing.

Key Takeaways

  • Home prices and buyer competition are higher in spring and summer. Both tend to cool down in the fall.
  • Age may not be a significant factor, since there are homebuyers in age groups from 18 to 95.
  • Lenders look for financial readiness based on income reliability and consistent, timely bill payments.
  • Taking time to improve your credit score may not always be necessary when interest rates are low.

The Best Time of the Year To Buy a House

Unless you work in real estate, you probably wouldn't know the connection between seasons and home prices. Home prices tend to rise and fall seasonally in line with home purchases. Prices and sales increase in the spring and summer, then taper off and drop in the fall and winter. Waiting until the weather cools off can help you get a better-priced home, if you can find one. Falling home sales in autumn means there are fewer homes available for purchase.

While you’ll want to align your home purchase with the season in which prices and availability are in your favor, buying when you're mentally and financially ready is most important.

The Best Age To Buy a House

You may be eager to own a piece of the American Dream as early as possible, but there's no right age for purchasing a home—although the typical first-time homebuyer is 33 years old according to the National Association of Realtors. The age you're mentally and financially ready to purchase a home is the best age to buy, whether that's age 20 or 70.

While debt payments and credit scores are common homebuying obstacles, there are benefits to buying when you're young. You can start building equity—and wealth—earlier in life as you pay off your mortgage and your home appreciates. However, if there's a high chance you could have to relocate within the next five years, you won’t want to lose equity by moving too soon.

Delaying your home purchase also gives you more time to add to your down payment and can also make your housing costs more affordable. If you have to wait to buy your first home, you won't be alone. There are first-time homebuyers in all age groups, even ages 75 to 95.

Paying a down payment of 20% of the value of your home allows you to avoid adding private mortgage insurance (PMI) to your monthly payment.

When the Market Benefits Homebuyers

The housing market—and the larger economy—are important factors in purchasing a home. You’ll have a better chance of getting a good deal when there are more houses for sale than buyers looking for houses.

Historically, the months leading up to a recession tend to favor buyers. People are less willing to spend money overall, so there are fewer homebuyers and less competition for those who are looking. Interest rates tend to fall during recessions, which makes financing more affordable. Home prices also tend to fall during this type of market.

Pay attention to home trends in the area you're considering your home purchase. Local housing market trends don't always follow the nationwide housing market.

When It Makes Financial Sense To Buy a House

Of all the factors, your personal finances have the biggest impact on purchasing a home, especially if you're taking out a mortgage to finance your home. You'll need to show the lender that you can afford to make your monthly payments.

Down Payment

You may not need as high of a down payment as you think. Homebuyers should have a minimum of 5% of the target purchase price saved as a down payment, Melanie Stuckey, president and CEO of Synergy Mortgage Group in Tallahassee, Florida, told The Balance by phone. This would be enough to cover the minimum down payment for government-backed loans such as FHA loans and closing costs.

The median down payment among all buyers is 12%, which most buyers get from their savings.

Credit Score

When it comes to having the ideal credit score, Stuckey suggested weighing the rate you currently qualify for against the risk of rates increasing in the near future. "When interest rates are low, homebuyers with low credit scores often qualify for lower rates than they would with a high credit score when interest rates are high," Stuckey said. In other words, spending time to raise your credit score isn't always the best move.

Demonstrating consistent financial responsibility is most important. That means being on time with all bill payments, even those that aren't regularly reported to the credit bureaus. You can still qualify for a mortgage if you don't have a credit score. Stuckey said she assists these kinds of homebuyers often. She recommended working with lenders that review nontraditional payment history, such as a phone bill or light bill, to verify your payment history when you don't have a credit score.

Debt-to-Income Ratio

Lenders use your debt-to-income ratio—the percentage of your income that goes toward debt repayment—to gauge how comfortable you'll be with a mortgage payment. However, it can be tough for lenders to calculate your debt-to-income ratio if a large portion of your income relies on nontraditional sources.

"The mortgage industry doesn't have all the tools in place to consider many of the popular income streams like Airbnb and YouTube services," said Stuckey. Nontraditional income also includes things such as ridesharing, food and grocery delivery, pet-sitting, or profits from an e-commerce store.

Having strong documentation can help you prove you can afford mortgage payments. Some lenders may request tax returns, bank statements, and profit and loss statements to verify your income.

Should You Buy a House Now?

Ultimately, the best time to buy a house is when it makes the most financial sense for you. Even at the right age and market conditions, you'll still need to have a down payment, consistent and provable income, emergency savings, and a solid bill payment history.

Once your finances are in place, navigating the housing and lending markets are the next factors to consider. Are houses in your desired location reasonably priced? Ideally, interest rates are low enough that you can finance your dream home at an affordable monthly payment.

You don't have to make the decisions on your own. Talking with a mortgage professional can help you weigh your options and determine whether buying now is in your favor. Delaying your purchase may be disappointing, but buying at the right time is best in the long run.

Frequently Asked Questions (FAQs)

What credit score do you need to buy a house?

Credit score requirements vary by lender and loan programs. Some programs, such as VA and USDA loans, do not set a minimum credit score, but lenders may have their own criteria. The Federal Housing Administration sets a minimum credit score requirement of 500. You'll typically need a high credit score for conventional loans, which are not part of a government program.

How much of a down payment do you need to buy a house?

Some loan programs don't require a down payment, but these may have specific requirements, like location or income restrictions. While the median down payment among all buyers is 12%, at least 3% down payment is a good starting point.

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Article Sources

  1. National Association of Realtors. “Seasonality in the Housing Market.”

  2. National Association of Realtors. “Highlights From the Profile of Home Buyers and Sellers.”

  3. National Association of Realtors. “2021 Home Buyers and Sellers Generational Trends Report,” Page 25.

  4. Consumer Financial Protection Bureau. “What Is Private Mortgage Insurance?"

  5. Congressional Research Service.“Introduction to U.S. Economy: Housing Market,” Page 2.

  6. National Association of Realtors. “2021 Home Buyers and Sellers Generational Trends Report,” Pages 85-86.

  7. FDIC. “203(b) Mortgage Insurance Program,” Page 2.

  8. Consumer Financial Protection Bureau. “Determine Your Down Payment.”