For most people, their first home isn’t their dream home. It starts off nice enough. But as time goes by and your family grows, starter homes tend to get a little . . . cramped.
But don’t hate on your current home too much. Because while it gave you a safe and dry place to lay your head at night, it was also setting you up to own your dream home someday.
We’ll show you how it all works and walk you through the steps that’ll get you in your dream home—one you can actually afford!
How to Get Your Dream Home in 5 Steps
Here are the steps:
- Follow the Financial Basics
- Find Out How Much Equity You Have
- Set Your New Home-Buying Budget
- Find the Right Dream Home for You
- Be Picky and Patient
Now let’s cover each step in more detail.
Step 1: Follow the Financial Basics
First thing’s first—you have to get out of debt, get on a budget, and build up an emergency fund of 3–6 months of expenses. Sounds pretty basic, right? If you haven’t completed these steps, then you’re not ready to upgrade to your dream home . . . yet.
Now, when you’ve got house fever, it can be hard to focus on paying off debt or saving an emergency fund before you upgrade your home—especially when you’re feeling the pressure of rising home prices and interest rates.
But whether it’s your second or third house, you should only buy a home when you’ve covered the financial basics we mentioned above. Then you’ll be ready to start the journey toward owning your dream house.
And that journey starts with your home equity. What’s equity? Well, we’re glad you asked . . . that brings us to the next step.
Step 2: Find Out How Much Equity You Have
Home equity is a pretty simple concept: It’s your current home’s value minus whatever you still owe on your mortgage.
See, in most cases, your home’s value increases over time. Similar to other long-term investments (like retirement accounts), homes gradually increase in value. There have been periods of ups and downs in the market to be sure, but the value of real estate has consistently gone up. According to the St. Louis Federal Reserve, the average sale price of a home has increased over 2,300% from 1965 to 2023! And in the last ten years (2013 to 2023), there’s been a 68% increase.1 As your home increases in value, so does your equity. In real estate terms, this is called appreciation.
Other factors that increase your home’s equity include:
- Added value: Home improvement projects like adding square footage, updating fixtures and appliances, or even just slapping on a new coat of paint can add value to your home.
- Mortgage paydown: Paying down your mortgage not only gets you out of debt faster, it also builds your equity. The less you owe on your home, the more equity you have.
The amount of equity you have gives you a pretty good idea of how much money you’ll end up with after selling your house. You can use that money to make a hefty down payment and cover the other costs that come with buying a home.
Find expert agents to help you buy your home.
So, how do you determine your home’s value? Well, you can get a ballpark estimate on real estate websites like Zillow, ask a trusted real estate agent to perform a competitive market analysis (which they’ll do anyway if they’re helping you sell your house), or get a professional appraisal.
Finding out your home’s equity will involve a little math, but it’s third-grade-level stuff, so don’t sweat it.
Here’s what we mean. Let’s say your home’s current value is $355,000. When you sell that house, you’ll have to pay for between 1–3% of the sale price in closing costs, another 6% in fees for the real estate agent who helped you sell it, and whatever’s left to pay off on your mortgage.
That means you can estimate clearing over $223,000 from selling your house. That’s a killer down payment on your dream home! And if your home is paid off, that’s even more money to put down and use to pay for things like repairs and moving expenses.
Step 3: Set Your Dream Home Budget
Once you know how much you’ll clear from the sale of your home, you can start making a budget for your dream home.
The key to owning your dream home (instead of it owning you) is to keep your mortgage payment to no more than 25% of your take-home pay on a 15-year fixed-rate mortgage, along with paying a down payment of at least 20% to avoid private mortgage insurance (PMI). Never get a 30-year mortgage even if the bank offers it (and they will). You’d pay a fortune in interest—money that should go toward building your wealth, not the bank’s.
So, let’s say your take-home pay is $4,800 a month. That means your monthly mortgage payment shouldn’t be any bigger than $1,200. By the way, that 25% figure should also include other home fees collected every month with the mortgage payment like homeowners association (HOA) fees, insurance premiums and property taxes.
Plug your numbers into our mortgage calculator to see how much house you can afford.
And don’t forget to budget for all those other costs that come with the home-buying process in addition to your closing fees—things like moving expenses and any upgrades or repairs you might need to make. You don’t want these hidden costs to catch you off guard or drain your emergency fund.
Step 4: Find the Right Dream Home for You
This is where things get real. After all your hard work building up your equity (and doing a lot of math—don’t forget that), you’re finally ready to start the house hunt. Woo-hoo!
But don’t lose focus. Stay zoned in by making a list of features that make a home fit your budget, lifestyle and dreams—and stick to it throughout your house hunt. Here are a few ideas to get you started.
- Don’t compromise on location and layout. If you plan to be in this home for the long haul, an out-of-the-way neighborhood or a wacky floor plan is a deal breaker. Look for a community and layout that’ll suit your lifestyle now and for years to come.
- Think about how much space your family needs. While your budget has the final say about how much home you buy, you’ll want your dream home to fit your family’s needs through different life seasons.
- Consider the school districts. If you have or want kids, the quality of the nearby school districts is probably already on your mind. But even if you don’t have kids or you’re retired, keep in mind that having good schools nearby could increase your home’s value.
- Look for a house that’ll grow in value. Are home values rising in the area? Is the number of businesses going up? These factors can help you figure out whether your dream home will turn into a good investment.
- Count the costs. Want that fancy master bathroom with the multiple showerheads and the Jacuzzi tub? Be clear on what’s a must-have and what’s nice to have. And don’t forget, upgraded features like that will make your dream home more expensive.
Step 5: Be Picky and Patient
We know you’re anxious to get into those new digs, but be patient. Wait for the right house at the right time. Don’t spend your money on a less-than-ideal home just because you’re tired of looking.
The key is finding a good real estate agent who understands your budget and refuses to settle for “good enough.” They’re as committed to your dream as you are and will have your back throughout the entire process, no matter what it takes.
In addition to teaming up with a great real estate agent, you can take a couple of extra steps to make sure you’re ready to strike as soon as the right home comes up:
- Get preapproved for a 15-year fixed-rate mortgage. Having preapproved financing is a green flag for sellers—especially in multiple offer situations. And because this puts most of your information in the lender’s system, you’ll be on the fast track to closing once your offer is accepted.
- Offer earnest money with your bid. Earnest money is a deposit to show you’re truly interested in a home. Usually it’s 1–2% of the home’s purchase price and it’s applied to your down payment or closing costs. Even if the deal falls through, you can almost always get most of it back.
Find a Real Estate Expert in Your Local Market
Now, you might be thinking you have some work to do before you’re ready to find your dream home. Or you may be realizing your years of hard work are about to pay off! Regardless, if you follow these steps, you’ll find the house you’ve always wanted and avoid a purchase you’ll regret.
Once you’re ready, connect with one of our RamseyTrusted real estate agents. These are high-performing agents who do business the Ramsey way and share your values so you can rest easy knowing the search for your dream home is in the right hands.
Find the only real estate agents in your area we trust, and start the hunt for your dream home!
I Had My Son Do a DNA Test Which Confirmed Paternity, but Then His Fiancée’s Mother Called and Left Me Totally Shocked
Let me tell you about my son, Ryan. His journey through college was pretty much like any other kid’s, filled with ups and downs, late-night study sessions, and the occasional party. It was during his senior year, though, that he dropped a bombshell on me that would change the dynamics of our family forever. Ryan told me his girlfriend, Shelly, was pregnant.
Now, Ryan’s a good kid — responsible, kind-hearted, and a bit naive when it comes to matters of the heart. So, when he shared the news, my first instinct was to ensure he wasn’t walking into a situation blindly. I suggested a DNA test, just to be sure. Ryan, bless him, took the advice in stride and got the test done. When the results confirmed he was the father, he didn’t hesitate to stand by Shelly and start dating her officially.
A guy in college studying | Source: Pexels
The first time I met Shelly, I knew we were going to have a rough start. She confronted me about the DNA test, accusing me of thinking the worst of her. I tried to explain it was just a precaution, a standard piece of advice I’d give in any similar situation, but the damage was done. Our relationship started on the wrong foot, and despite her integration into the family, things between us never warmed up. I decided to keep my distance for the sake of peace, being civil at family events but nothing more.
A pregnancy test | Source: Pexels
Time passed, and Ryan and Shelly’s relationship blossomed into an engagement. That’s when things took a turn for the worse. Shelly, for reasons known only to her, began slandering me to anyone who would listen. She painted me as this villain, twisting my words and actions into something sinister. It was like she was on a mission to turn my own family against me, and the sad part was, it was working. My son, caught between his mother and his future wife, felt he had to make a stand. He gave me an ultimatum: apologize to Shelly for things I never said or did, or be barred from their wedding.
A guy proposing to his girlfriend | Source: Pexels
I was stuck between a rock and a hard place. Apologizing for things I hadn’t done would be admitting guilt to lies and slander, but standing my ground meant missing one of the most important days in my son’s life. In the end, I chose my integrity, refusing to apologize for offenses I hadn’t committed.
Consequently, I was uninvited from the wedding. The fallout was immediate and painful; friends and family turned their backs on me, swallowing Shelly’s stories without a second thought. It was a lonely time, filled with a lot of soul-searching and questioning where things went wrong.
A sad man | Source: Pexels
Then, two weeks before the wedding, out of the blue, I received a phone call that would throw everything into even more chaos. It was Shelly’s mother, Jen — a woman I had barely interacted with, given my strained relationship with her daughter. Her voice was anxious, laced with an urgency that immediately set off alarm bells in my head.
A man on the phone | Source: Pexels
“Hi. Get in the car and drive to me, it’s urgent.”
“Hey Jen. What’s that?”
And then she dropped a bombshell on me. Her words were rushed, urgent, and they carried a weight that I couldn’t immediately understand. “We need to cancel the wedding,” she said, a statement so bold and out of the blue that it momentarily took my breath away. “I found out Shelly really was lying all this time. I can’t allow your son’s life to be ruined like this.”
A woman on a phone call | Source: Pexels
My heart skipped a beat. “But how? The test showed he is the father,” I responded, my mind racing through the implications of her words.
Jen’s next question caught me off guard. “Didn’t your son say where they did the test?” I realized then that Ryan had never mentioned specifics, and a sinking feeling began to take hold. Jen revealed something that made the pieces start to fall into place in the most unsettling way.
Test tubes with liquid | Source: Pexels
The paternity test — Shelly had arranged it through her father, Jen’s ex-husband, a detail that Ryan, nor I, had been privy to. Jen was convinced the results we’d been shown were fabricated.
My heart pounded as the truth began to dawn on me. Ryan had never seen the actual test results, only the conclusions as presented by Shelly’s father. The realization hit me like a freight train: we had been deceived on the most fundamental level.
A shocked man reading a letter | Source: Pexels
In the days that followed, the truth unraveled like a thread pulled from a sweater, undoing the fabric of lies Shelly had woven. It turned out Shelly had been dating multiple guys and got pregnant accidentally. The real father was someone with no means to provide, and somehow, Shelly decided to pin her hopes and future on Ryan, my son, exploiting our family’s financial stability.
A pregnant woman | Source: Pexels
The fallout was devastating. Ryan was heartbroken, his trust shattered by the person he had been ready to build a life with. The wedding was called off, and the family was thrown into turmoil, trying to grapple with the deception and its implications. Shelly, faced with the exposure of her lies, chose to leave, moving in with her father, the same man who had aided her deceit.
A bride on her own | Source: Pexels
It was a trying time for all of us, especially for Ryan. Yet, through the storm of emotions and upheaval, there were unexpected silver linings. Jen and I, once at odds because of our children’s relationship, found common ground in our mutual concern for our kids’ well-being. We started communicating periodically, a connection forged in the fire of our shared ordeal.
A sad young man | Source: Pexels
The aftermath was a period of healing and reflection. Ryan took time to mend, leaning on his family and reevaluating what he wanted for his future. It was a tough lesson in trust, love, and the complexities of relationships. But eventually, he emerged stronger, more resilient, and with a clearer understanding of himself and his values.
A happy older man on the phone | Source: Pexels
In the end, life has a way of moving forward, of healing wounds and offering new paths. Ryan found peace, and our family found unity in the face of betrayal. Shelly’s departure marked the end of a tumultuous chapter, but for us, it was the beginning of something new — lessons learned, bonds strengthened, and a future filled with hope.
How would you have reacted when you heard your son was being taken advantage of? Let us know on Facebook.
Meanwhile, here’s another story about a DNA test that exposed a mother-in-law’s secret.
I Did DNA Test to Prove I Didn’t Cheat on My Husband, Exposed My MIL’s Humiliating Secret Instead
Marrying Jake was the culmination of every dream I’d ever had about love and family. At 25, I felt like the luckiest woman alive, stepping into a future that seemed as bright and promising as the man standing beside me at the altar. Our life together was everything I’d hoped for, a perfect blend of love, laughter, and shared dreams. Yet, amidst this idyllic existence, there lingered a shadow, a detail so significant it threatened the very fabric of our happiness.
A sad older woman | Source: Pexels
Two months ago, we welcomed our daughter, Jess, into the world. Her arrival should have been an unblemished joy, but instead, it became the center of unwelcome speculation. Jess had vibrant green eyes, a trait that stood out as an anomaly in both our families, sparking whispers and doubts about her paternity.
A frustrated young couple | Source: Pexels
Despite Jake’s unwavering trust in me, the constant barrage of insinuations from our families wore us down. In a bid to silence the gossip and solidify our family against external doubts, I suggested a paternity test, a decision that Jake initially resisted. He believed in us, in me, and saw no need to prove our truth to anyone. However, the persistent whispers eventually led us to proceed with the test, hoping it would put an end to the speculation.
An older man with a book open in front of him | Source: Pexels
The day the results came, we decided to face the music together, inviting our families over for a dinner that would reveal more than anyone had bargained for. As I stood before them, test results in hand, the tension was palpable. “Jess is indeed your daughter, but your dad isn’t actually your dad,” I revealed, my words hanging in the air like a thunderclap.
An adult son sitting with his stressed father | Source: Shutterstock
The reaction was immediate and visceral. My mother-in-law, Janice, paled, her actions betraying her before words could. My father-in-law was shell-shocked, the revelation tearing through decades of marriage and trust like a knife. Janice’s protests of innocence and manipulation fell on deaf ears as the magnitude of her deception became apparent.
The fallout was cataclysmic. A secret affair, buried for years, came to light, challenging the identity and relationships within Jake’s family. My father-in-law’s departure marked a poignant moment of realization for us all, as we grappled with the implications of a lie that had shaped the very foundation of their family.
A sad older woman | Source: Pexels
In the aftermath, Jake and I were thrust into an emotional maelstrom. What had started as an attempt to defend our family from unjust suspicion had unraveled a tapestry of lies, revealing a betrayal that went far beyond our immediate concerns. We were left to navigate the complex terrain of trust, identity, and familial bonds, forever altered by the truths that had come to light.
As my husband and I stood amidst the wreckage of his family’s legacy, we realized that our journey was far from over. The challenges we faced, though daunting, reinforced our commitment to each other and to Jess. In the face of upheaval, we found strength in our unity, a testament to the enduring power of love and the resilience of family.
This revelation, while painful, marked the beginning of a new chapter for us. One where the definitions of family, loyalty, and love were rewritten in the context of honesty and acceptance. Amidst the chaos, our dedication to each other remained a guiding light, leading us toward healing and a deeper understanding of what it means to belong.
This work is inspired by real events and people, but it has been fictionalized for creative purposes. Names, characters, and details have been changed to protect privacy and enhance the narrative. Any resemblance to actual persons, living or dead, or actual events is purely coincidental and not intended by the author.
The author and publisher make no claims to the accuracy of events or the portrayal of characters and are not liable for any misinterpretation. This story is provided “as is,” and any opinions expressed are those of the characters and do not reflect the views of the author or publisher.
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