The median first-time buyer in NAR’s 2025 profile was 40 years old, and first-time buyers were just 21% of the market, a record low. That is not because people stopped wanting homes. With the 30-year fixed in the mid-6s and the median existing home around $429,300 in mid-2026, the bar for being ready is simply higher than it was, and the cost of getting it wrong is a payment that follows you for decades. Here are the four signs that say you are actually ready, updated for what lenders and the market look like now.

1. Your income is steady, and you can prove it

A mortgage is a promise to make the same payment through your best years and your worst ones, so the first test is whether your income can be counted on. Lenders apply that test literally. Conventional underwriting looks at your most recent two years of employment; a two-year history for each income source is the standard, though income received for a shorter period, but no less than 12 months, can be considered when the lender can justify it. Gaps in the past 12 months have to be explained, and any income with a known end date, such as a contract or a benefit, must be expected to continue for at least three years.

The readiness question behind the underwriting question is simpler: if your household lost one paycheck, could you still make the payment for a few months while you replaced it? If the honest answer is no, you are not ready yet, whatever the pre-approval says.

2. You plan to stay long enough for buying to beat renting

Buying costs money on the way in and the way out. Closing costs typically run 2% to 5% of the loan amount, and selling later means commissions and another round of fees. Those costs only make sense if you hold the home long enough for equity and appreciation to outrun them. Zillow’s June 2026 analysis puts that breakeven at about six years nationally, down from 8.4 years in October 2023, but the range is enormous: around four years in the fastest metros, 16 to 23 years in the most expensive coastal markets, and in San Francisco and San Jose buying does not beat renting within 30 years at all.

So the second sign is a horizon, not a feeling. If you can see yourself in the same house, and the same job market, for at least the six years or so the national breakeven implies, buying has a real chance to pay. If a relocation, a growing family or a career change could plausibly move you in two or three, renting is not a failure; it is the cheaper answer. Four reasons you may want to keep renting makes that case in full.

3. Your debt is under control

The classic guideline is 28/36: housing costs at or under 28% of gross monthly income, all debt payments combined at or under 36%. Treat it as your rule, not the lender’s, because the lender will go much further. Fannie Mae’s automated underwriting approves conventional loans with total debt-to-income ratios as high as 50%, and FHA approvals can stretch higher still with compensating factors. An approval at those levels is a ceiling, not a recommendation. Our guide to how much house you can handle turns the guideline into a price at 2026 rates.

Credit is the other half of this sign. FHA loans start at a 580 score for the 3.5% down payment; conventional lenders typically look for around 620, though Fannie Mae’s automated system no longer enforces a fixed minimum and most lenders keep their own floors. Pull your reports free each week at AnnualCreditReport.com, get card balances below 30% of their limits, and fix errors months before you apply, not weeks. Since April 2026 lenders may also use VantageScore 4.0 or FICO Score 10T, which can count on-time rent and utility payments when they are reported, a help for thin files.

4. You have the cash, and not just for the down payment

The old rule said save 20%. In 2026, 20% down does one specific thing: it avoids private mortgage insurance on a conventional loan. It is not a requirement. FHA loans need 3.5% down with a 580 score, Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow 3% for buyers earning up to 80% of area median income, Conventional 97 allows 3% with no income cap but generally requires a first-time buyer, and USDA loans are $0 down in eligible rural and suburban areas. Real buyers behave accordingly: the median first-time buyer in NAR’s 2025 profile put down 10%, and 22% of them used a gift or loan from family or friends. The best mortgage options for first-time buyers in 2026 compares the programs.

What a small down payment does not do is shrink the payment. On a $429,300 home at 6.5%, a 30-year loan with 3% down runs about $2,632 a month in principal and interest, versus about $2,171 with 20% down, and the low-down version adds mortgage insurance on top. So the cash test has three parts, not one:

  • The down payment for the program you actually qualify for.
  • Closing costs, typically 2% to 5% of the loan amount, which no low-down program waives.
  • An emergency fund that survives the purchase. Conventional lenders require no minimum reserves on a one-unit primary residence, so nobody will make you keep one. Keep one anyway, in a high-yield account paying around 4%, sized to your own situation rather than a rule of thumb. If writing the down-payment check would drain it, you are one furnace away from being house-poor.

Not everyone is ready at the same time, and a mid-2026 market with more inventory and flat prices rewards the buyer who waits until all four signs line up. Three out of four is a reason to keep saving, not a reason to stretch.