Am I Ready to Buy a House? Four Questions Every Kansas City Buyer Should Answer First
By Joe Nelson — Retired Air Force, Nelson Home Group Team Leader and Mortgage Loan Originator
If you are asking yourself, am I ready to buy a house, the honest answer comes down to four specific questions. Do you have a steady income you expect to keep? Do you have money saved for a down payment and closing costs? Do you have a qualifying credit score? Can you comfortably afford the monthly payment plus taxes, insurance, and maintenance? If you can say yes to all four, you are ready to start the conversation with a lender and an agent today. If you cannot say yes to one or two, the path forward is usually shorter and clearer than you think.
Readiness is not a feeling. It is the answer to four questions. If you can say yes to all four, you are ready to start.
1. Do You Have a Steady, Reliable Income?
Lenders want to see that your income is consistent and likely to continue. The standard benchmark is two years of stable employment history in the same line of work. That does not mean two years at the exact same employer. If you changed jobs within the same industry, that usually counts. If you are self-employed or a 1099 contractor, lenders will ask for two years of tax returns and look at your net income after business expenses.
The other piece of the income picture is your debt-to-income ratio. This is the percentage of your gross monthly income that goes toward debt payments, including the future mortgage payment you are about to take on. Most loan programs cap this between 43 and 50 percent. VA loans are generally more flexible on debt-to-income than conventional or FHA.
As both Realtors and a licensed mortgage originator, we see this from both sides of the deal. On a first call, we can run your income scenario in-house and tell you exactly what qualifies and what does not, including bonuses, commissions, overtime, and self-employment income. Most agents send you to a separate lender for that conversation. We can have it with you directly.
Want the full Nelson Home Group Home Buying Guide? Scroll to the Contact form at the bottom of this page, fill it out, and drop a note in the Message field asking for the guide. We will email it to you. No pressure, no spam, no expectation you are ready to buy tomorrow.
2. Do You Have Money Saved for a Down Payment and Closing Costs?
Most first-time buyers believe they need 20 percent down. That is the single most expensive myth in home buying. Current loan programs allow for much less. VA loans for qualifying veterans, active duty service members, National Guard, Reserves, and surviving spouses require zero dollars down. FHA loans require 3.5 percent. Conventional loans for first-time buyers can go as low as 3 percent. On a $300,000 Kansas City home, that is the difference between needing $60,000 saved and needing $9,000 to $15,000 saved to get into the house.
The twenty percent myth is the single most expensive myth in home buying. It has kept more qualified buyers out of homes than any interest rate cycle.
Closing costs are the second piece. In Kansas City, closing costs typically run $4,000 to $7,000 depending on the loan type and sale price. That covers lender fees, title insurance, recording fees, escrow setup, and the first year of homeowners insurance in most cases.
There are also down payment assistance programs in both Missouri and Kansas that can cover part or all of the down payment for qualifying buyers. The Missouri Housing Development Commission and Kansas Housing Resources Corporation both run active programs. Most buyers do not know these exist because no one tells them.
3. Do You Have a Qualifying Credit Score?
Each loan type has its own credit floor. VA loans have no hard credit score minimum at the agency level, though most lenders require 580 to 620. FHA loans allow scores as low as 580 with 3.5 percent down, or 500 with 10 percent down. Conventional loans typically require 620 or higher, with the best interest rates reserved for scores of 740 and above.
If your credit is not where it needs to be yet, that does not mean homeownership is off the table. It means you need a plan. Paying down revolving debt, disputing errors on your credit report, and avoiding new credit applications in the twelve months before you apply for a mortgage are the three highest-leverage moves. A good mortgage originator will walk you through exactly what to do and in what order.
4. Can You Comfortably Afford the Monthly Payment?
The monthly payment is more than principal and interest. It is PITI: Principal, Interest, Taxes, and Insurance. On a Kansas City home, the property tax line alone can swing your payment by $200 to $400 per month depending on which county you buy in. Jackson County, Clay County, Platte County, Johnson County, and Wyandotte County all have different tax rates, and the Missouri versus Kansas decision has real payment implications.
Homeowners insurance in Kansas City typically runs $1,200 to $2,000 per year. If you put down less than 20 percent on a conventional loan, private mortgage insurance gets added on top. FHA loans have their own mortgage insurance premium. VA loans have no monthly mortgage insurance, which is one of the reasons VA loans save veterans thousands of dollars over the life of the loan.
On top of PITI, a sustainable buyer budgets for maintenance. The rule of thumb is one percent of the home’s value per year. On a $300,000 home, that is $3,000 annually, or $250 per month, set aside for the roof, the HVAC, the water heater, and the appliances that eventually break.
We can run your full PITI scenario with actual KC county tax rates built in before you tour a single house. Run the numbers yourself with our mortgage calculator, then call us to walk through the full picture.
5. Am I Ready to Buy a House If I Can’t Say Yes to All Four Yet?
Usually, yes. Maybe not today, but probably sooner than you think.
Most buyers who come to us asking am I ready to buy a house have at least one or two gaps. That is normal. We see buyers who believe they need another two years of saving actually find out the real gap is six to nine months. Sometimes it is zero months, and they are ready right now. The only way to know is to have the conversation. A no-obligation call with one of our buyer specialists gets you a clear read on where you stand, what the gap looks like, and what the concrete next steps are.
The gap between where you are and where you need to be is almost always smaller than it feels in your head at 11pm.
Frequently Asked Questions
How much money do I need to buy a house in Kansas City?
It depends on the loan type. VA loans require zero down payment for qualifying veterans, active duty service members, National Guard, Reserves, and surviving spouses. FHA loans require 3.5 percent down. Conventional loans for first-time buyers can go as low as 3 percent. On top of the down payment, plan for $4,000 to $7,000 in closing costs depending on the purchase price and loan type.
What credit score do I need to buy a house?
VA loans have no hard credit score minimum at the agency level, though most lenders want to see 580 to 620. FHA loans allow scores as low as 580 with 3.5 percent down, or 500 with 10 percent down. Conventional loans typically require 620 or higher, with the best interest rates reserved for scores of 740 and above.
Can I qualify for a mortgage if I am self-employed?
Yes. Self-employed buyers can qualify for any major loan type. Lenders will ask for two years of tax returns and look at your net income after business expenses to calculate qualifying income. If your tax strategy has aggressively minimized reported income, that can hurt your qualification, so plan ahead in the two tax years before you apply.
Do I need a 20 percent down payment to buy a house?
No. The 20 percent down payment is the single most common myth in home buying. VA loans require zero down. FHA loans require 3.5 percent. Conventional loans for first-time buyers can go as low as 3 percent. On a $300,000 home, that is the difference between needing $60,000 saved and needing $9,000 to $15,000 saved to get into the house.
What is PITI and how do I calculate it?
PITI stands for Principal, Interest, Taxes, and Insurance. It is the full monthly payment on a home, not just the mortgage principal and interest. In Kansas City, the property tax line alone can add $200 to $400 per month depending on the county. Homeowners insurance adds another $100 to $170 per month. Private mortgage insurance is added on top if you put down less than 20 percent on a conventional loan. Our team can run your full PITI scenario with actual KC county tax rates built in before you tour a single house.
Ready to Talk?
Whether you can answer yes to all four questions today or you are still working on one of them, a no-obligation conversation with a Nelson Home Group buyer specialist gets you an honest read on where you stand. Call, email, or scroll down to the Contact form at the bottom of this page, whichever is easiest. You do not need to have everything figured out before reaching out. That is what the conversation is for.
Call: 816.680.6624
Email: nelsonhomegroup@gmail.com