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!
My In-Laws Demanded Our Luxury Villa on Our Family Honeymoon – My Husband Gave Me the Green Light to Put Them in Their Place
What was supposed to be a dream honeymoon in Bora Bora quickly turned into a battle for control when my in-laws demanded our luxury villa for themselves. But when my husband finally allowed me to handle them, I made sure they got exactly what they deserved.
When we broke the news, my parents were overjoyed. They had always been modest, easygoing people who never expected extravagance.
A happy middle-aged couple | Source: Pexels
Growing up, vacations for us meant road trips, budget-friendly hotels, and simple pleasures like picnics on the beach. So, when Mark and I invited them on this luxurious trip, they were stunned.
My mom teared up, and my dad kept shaking his head, saying, “Are you sure this isn’t too much?” They kept thanking us, calling it the trip of a lifetime.
A happy surprised man | Source: Pexels
Mark’s parents, however, were harder to please.
Before we even booked the trip, I got a taste of just how much control Mark’s parents had over him. We had originally planned to go in late May. But when Mark told his mom, she immediately shot it down.
An upset mature woman | Source: Pexels
“No, Mark. That won’t work for us,” Linda had said firmly. “Your father has his golf tournament, and I have my garden club’s spring luncheon. You’ll have to move it.”
I had expected Mark to push back, to remind her that this was our honeymoon, not a family reunion. Instead, he sighed, gave me an apologetic look, and said, “We can reschedule, right?”
I was stunned. “Mark, we already put down deposits.”
A couple arguing | Source: Pexels
“I’ll cover the change fees,” he assured me. “It’s just easier this way.”
It wasn’t easier for me or my parents, who had to rearrange their own commitments. But for Linda and Richard? It was perfect. And, as always, what they wanted came first.
That night, I confronted him. “You can’t keep letting them run our lives.”
He sighed, rubbing his temples. “Just this once,” he promised. “After this trip, no more. We’re setting boundaries.”
A sad man sitting at a table | Source: Pexels
I smiled and squeezed his hand. “Next time, let me handle things.”
We had booked them a gorgeous bungalow on the water. It had a glass floor, an open-air bathroom, and a private deck. But their expressions when they arrived? Disappointment. They barely said thank you.
A disappointed couple in an airport | Source: Midjourney
Mark and I, on the other hand, had taken the only available villa. It turned out to be a 4,000-square-foot paradise. It had a sauna, an outdoor tub, a private pool, and an ocean slide that dropped straight into the turquoise water. It was breathtaking.
Still, I had a feeling trouble was brewing.
At first, I thought Mark’s parents just needed time to adjust. Maybe they were overwhelmed. But I was so wrong.
A smiling woman near a pool | Source: Midjourney
That evening, we all gathered for dinner. The warm air smelled like coconut and grilled seafood. The sun dipped into the horizon, painting the sky in pink and gold. We were laughing, enjoying fresh pineapple cocktails, when my cousin Jason leaned over to me, grinning.
“That ocean slide of yours is insane! I saw the pics—can I try it tomorrow?”
I laughed. “Of course! It’s so much fun.”
A laughing woman in a cafe | Source: Midjourney
But across the table, I heard a loud gasp.
“Wait… WHAT?” My mother-in-law, Linda, slapped her hand against the table. Her eyes darted to Mark. “You have an ocean slide?”
My father-in-law, Richard, frowned. “Your place has a slide?”
I felt my stomach twist. Here we go.
A frowning middle-aged man in a cafe | Source: Midjourney
Linda grabbed Mark’s phone off the table. She scrolled through the photos we had taken earlier that day. Her face turned red. “Mark, THIS is your place?!”
Mark hesitated. “Uh… yeah?”
Richard shoved his chair back. “And we’re stuck in a bungalow?!”
I blinked. Stuck? The bungalows were luxurious. People dreamed of staying in one.
A shocked woman in a denim jacket | Source: Freepik
“Mom, Dad,” Mark started, “your place is amazing. It’s the best bungalow they offer.”
“But it’s NOT a villa,” Linda snapped. She turned to me, voice sharp. “Why do YOU get the best place?”
I took a slow breath. Stay calm, Emily. “There was only one villa available,” I said. “It wouldn’t have been fair to give it to just one set of parents.”
A serious woman in a cafe | Source: Midjourney
Linda huffed. “We’re the elders! We shouldn’t live like peasants while our children enjoy luxury!”
I almost choked on my drink. Peasants? In Bora Bora?
Richard crossed his arms. “Mark OWES us. We raised him. He wouldn’t even be here without us.”
Linda nodded, smug. “You can’t even sacrifice a little for family?”
An angry middle-aged woman in a cafe | Source: Midjourney
Mark sat frozen. His eyes darted between me and his parents. Linda’s nostrils flared. Richard’s jaw was clenched so tight I thought he might break a tooth.
“Mark,” Linda snapped, expecting him to take their side. “Say something!”
A dissatisfied couple in a cafe | Source: Midjourney
Mark opened his mouth, then shut it. His hands curled into fists on the table. I could see the battle in his head. He had spent his entire life bending to their will. But now, it wasn’t just about him. It was about us.
He glanced at me. His blue eyes searched mine. And then, he exhaled and nodded. A small, almost imperceptible nod. My heart leaped. He was giving me permission.
A tired man in a cafe | Source: Midjourney
I turned to my in-laws, keeping my voice steady. “I understand you want something better. You’re right—family should be treated well. I’ll make sure you get the special treatment you deserve.”
Linda smirked. “Well, it’s about time.”
Richard scoffed. “Should’ve done that in the first place.”
A smirking couple looking at each other | Source: Midjourney
They stood up, practically preening, acting as if they had just won some great battle. Linda threw her napkin onto the table. “We’ll expect the change first thing in the morning.”
Richard grumbled under his breath as they stalked off. I caught the words “ungrateful children” before they disappeared down the wooden walkway.
I turned back to Mark. He exhaled, rubbing his face.
“Are you sure about this?” he asked.
A hesitant man in a cafe | Source: Midjourney
I smiled. “Oh, I’m very sure.”
That night, I made a quick call to the resort’s concierge. The request? An ‘upgrade’ for my in-laws.
The woman on the other end of the line was confused at first, but once I explained the situation, she let out a soft laugh.
“You want me to book them a flight home?” she asked.
A happy smiling woman talking on her phone | Source: Pexels
“First-class,” I confirmed. “Only the best for them.”
“Consider it done.”
The next morning, I woke up to the sound of suitcases rolling across the wooden deck outside my villa. I stepped onto the balcony just in time to see Linda and Richard arriving at the front desk, their chests puffed out in expectation.
An entitled couple at a front desk | Source: Midjourney
They were already gloating. I could see the certainty that they were about to waltz into our villa and take what they believed they deserved in their faces.
The concierge approached them with a warm smile. “Mr. and Mrs. Harrison, your special arrangements have been finalized.”
Linda beamed. “Finally! Where are our new keys?”
A smiling concierge in a hotel | Source: Midjourney
She handed them an envelope. “Your first-class tickets.”
Silence.
Linda’s eyebrows shot up. “Tickets?”
Richard snatched the envelope, ripping it open. His face turned a shade of red I hadn’t seen before. “This is a joke,” he growled. “This is a goddamn joke.”
An angry mature man | Source: Freepik
Linda’s mouth opened and closed like a fish. “YOU’RE SENDING US HOME?!” she shrieked so loudly that nearby guests turned to stare.
I stepped forward, flashing them my sweetest smile. “You said you deserved the best… and home is the best place we could find for you.”
Richard’s face burned. “HOW DARE YOU?!”
“Oh, very easily,” I said lightly.
A laughing blonde woman at a front desk | Source: Midjourney
Linda looked around, desperate for someone to intervene. She turned to Mark. “You’re going to let her do this to us?”
Mark sighed, running a hand through his hair. “Honestly? Yeah.”
Linda gasped like he had just slapped her. “We’re your parents!”
“And we’re on our honeymoon,” he replied. “You don’t even like Bora Bora, Mom. You complained the entire flight.”
An apologetic man in a hotel | Source: Midjourney
Linda sputtered, grasping at an argument. “Well… we… we didn’t think we’d be treated like this.”
I shrugged. “Safe travels.”
And just like that, the resort staff took over. Their bags were already packed and loaded onto a boat. Linda was still screeching when the boat pulled away from the dock. Mark stepped beside me, watching his parents disappear across the water.
A couple at a resort | Source: Pexels
He exhaled, shaking his head. “I can’t believe you actually did that.”
I wrapped an arm around his waist. “Believe it.”
He turned to me, his expression softer than I had seen in days. “I’m sorry I let it get this bad. I should have shut it down sooner.”
I reached for his hand. “You did the right thing in the end. That’s what matters.”
And finally, for the first time since we arrived, we could enjoy our honeymoon.
A couple under coconut trees | Source: Pexels
We spent the next few days soaking up every bit of luxury the villa had to offer.
We had slow, lazy mornings, wrapped up in each other, watching the sunrise over the ocean from our private deck. We sipped coffee in bed, no one interrupting us, no guilt hanging in the air.
At night, we had romantic dinners in our villa, the sound of waves in the background, the entire world feeling like it belonged to just us.
A couple on a romantic dinner | Source: Pexels
One evening, as we lounged in the outdoor tub, Mark pulled me close, pressing a kiss to my forehead. “Best decision ever,” he murmured.
I smiled, sinking into his embrace. This trip was supposed to be about celebrating love, and in a way, it still was.
A happy couple at a resort | Source: Pexels
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.
Leave a Reply