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!
Woman Tires of Admirer Who Joins Her Jog Every Morning but Desperately Searches for Him When He Doesn’t Show Up — Story of the Day
Rebecca coped with her depression by organizing her life so there’d be no time for it. She’d been doing that for years since the divorce. Until one persistent stranger decided to interfere with her strict, lonely routine. Little did Rebecca know, he’d become the one person she’d end up missing.
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In the dim light of her bedroom, Rebecca lay on her back, her gaze locked on the digital clock beside her bed.
The numbers read 6:29. She took a steady breath, waiting for the clock to change.
As soon as it clicked to 6:30, the alarm went off, but Rebecca was quick to silence it.
She sat up, threw the covers aside, and rose from the bed with practiced precision.
For illustration purposes only. | Source: Midjourney
First things first—Rebecca smoothed out her sheets, arranging every corner until the bed looked crisp and perfectly made.
She walked into the bathroom, where everything had its place.
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Her toothbrush rested neatly in a holder, the soap was placed just so in a dish, and a small mirror hung over the sink.
Rebecca took a moment to look at her own reflection, her expression calm but distant.
For illustration purposes only. | Source: Midjourney
She was forty-seven, with lines of experience and resilience etched onto her face.
Seven years had passed since her divorce, and though the pain had dulled, it had left behind a scar.
Her response to the heartache had been order, discipline, and strict routine. These things brought her a sense of control, something solid to hold onto when life felt chaotic.
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At exactly seven o’clock, Rebecca laced up her running shoes, plugged in her headphones, and stepped outside, ready for her morning jog.
For illustration purposes only. | Source: Midjourney
For years, these runs had been her escape, a time to strengthen her body while listening to audiobooks that exercised her mind.
It was her shield against sadness, each step a way to push forward.
But for the past month, something had started to disrupt her carefully designed routine—a neighbor named Charlie, who seemed determined to break through her guarded solitude, one cheerful “good morning” at a time.
For illustration purposes only. | Source: Midjourney
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Charlie’s house was right across the street, and every morning, just as Rebecca fell into her steady pace, he would come bounding out, waving his arms like an enthusiastic kid, barely managing to keep his sneakers on.
This morning was no different. Rebecca spotted him out of the corner of her eye as he hopped down his steps, shoving his shoelaces into his sneakers in a hurry to catch up.
She sighed, rolling her eyes and speeding up, hoping he’d get the hint this time. But, as always, Charlie wouldn’t be discouraged so easily.
For illustration purposes only. | Source: Midjourney
“Rebecca! Wait, it’s me!” he called, his voice cheerful as he jogged over, waving with one hand and holding his side with the other.
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Rebecca pretended not to hear him and kept her eyes straight ahead, her footsteps rhythmic and focused.
But Charlie was determined, and soon he was jogging alongside her, albeit slightly out of breath.
“You’re fast… as always,” he managed between pants, giving her a crooked smile as he tried to match her pace.
For illustration purposes only. | Source: Midjourney
Rebecca pulled out one of her earbuds and glanced at him, feigning surprise. “Oh, hi, didn’t see you there,” she replied, with just a hint of annoyance.
She had her whole morning planned out, and chatting with her neighbor hadn’t been on the agenda.
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“No problem, totally my fault for being late,” Charlie said, his breath still coming in gasps.
Rebecca could see he was trying hard to keep up, yet he looked pleased just to be running alongside her.
For illustration purposes only. | Source: Midjourney
She gave a small, dismissive nod and was about to put her earbud back in when Charlie chimed in again.
“Hey, want to hear a joke?” he asked eagerly, his voice carrying that unbreakable enthusiasm she found both irritating and oddly endearing.
“You’d save more breath if you talked less while running…” she muttered, but he ignored her suggestion.
“Why did the scarecrow get a promotion?” he asked, grinning.
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For illustration purposes only. | Source: Midjourney
Rebecca sighed. She knew better than to indulge him, but she couldn’t help herself.
“I don’t know. Why?”
“Because he was outstanding in his field!” Charlie delivered the punchline with a broad, triumphant grin, his eyes bright with expectation.
Rebecca paused, rolling the joke over in her mind, and against her better judgment, a chuckle escaped her lips.
For illustration purposes only. | Source: Midjourney
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She quickly tried to stifle it, but it was too late. Charlie had seen her reaction, and his face lit up with delight.
“See? You smiled! I’m getting better at this,” he noted with satisfaction, practically glowing at his small victory.
Rebecca shook her head, but her smile lingered, however brief.
“I’ll give it to you, that one wasn’t… too bad,” she conceded, still pretending to be unimpressed.
For illustration purposes only. | Source: Midjourney
Charlie threw a fist in the air, grinning as if he’d won a prize.
“Finally! Progress!” he cheered, laughing.
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Rebecca picked up her pace again, leaving Charlie struggling to keep up.
Each morning, Rebecca found herself looking forward to the sight of Charlie bounding out of his house with his untied sneakers and his cheerful grin.
For illustration purposes only. | Source: Midjourney
His silly jokes that once made her roll her eyes had grown on her, and she found herself smiling more often, even laughing aloud, which was something she hadn’t done in a long time.
More surprising to her, she had started to slow her pace—just a bit—so they could talk longer.
Charlie’s enthusiasm and light-heartedness had a way of softening the strict walls Rebecca had built around herself.
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He had even managed to slip past her strict routine, something she thought no one could do.
For illustration purposes only. | Source: Midjourney
As she laced up her shoes and looked out the window, Rebecca found herself glancing at his house, as she had started doing most mornings. Today, though, something felt different.
The door to his house was shut tight, and there was no sign of him.
She checked her watch and waited, telling herself not to worry. But after a few more minutes passed, doubt crept in.
This wasn’t like Charlie—he was always so excited to join her.
For illustration purposes only. | Source: Midjourney
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She hesitated, feeling a strange mix of concern and disappointment, but finally, she walked over to his house and knocked on the door.
She tapped her foot as she waited, glancing around and hoping he’d just forgotten to wake up. But there was no answer.
She rang the doorbell again, then leaned close to the window, peeking inside, but the rooms were still and quiet.
“Charlie! Are you there?” she called, trying to keep her voice steady. “Come on, you’re missing our jog!”
For illustration purposes only. | Source: Midjourney
She hoped he’d suddenly appear, laughing and apologizing for being late. But all she heard was silence.
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Just then, an elderly voice spoke from nearby.
“Who’s shouting out here?” Startled, Rebecca turned to see Mrs. Lewis, an elderly woman who lived next door to Charlie, watching her with curiosity.
“Oh, Mrs. Lewis,” Rebecca said, feeling embarrassed for the outburst.
For illustration purposes only. | Source: Midjourney
“I usually run with Charlie, but he didn’t show up today. Maybe he overslept,” she added, her voice quieter, almost as if she were speaking to herself.
She felt a pang of worry, wondering if maybe he simply didn’t want to run with her anymore.
Mrs. Lewis shook her head, looking concerned.
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“Overslept? Oh no, dear. He was taken to the hospital by ambulance last night.”
For illustration purposes only. | Source: Midjourney
Rebecca’s heart skipped a beat.
“The hospital? What happened to him?”
Mrs. Lewis sighed, clearly upset herself.
“I’m not sure. I only saw the ambulance pull up and take him away. It’s such a shame. Poor man lives alone with no one to watch over him.”
For illustration purposes only. | Source: Midjourney
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Rebecca stood there, processing the news, a wave of guilt and worry washing over her.
She had only known Charlie for a short while, but in that time, he had somehow become a part of her life, someone she looked forward to seeing.
Without a second thought, Rebecca thanked Mrs. Lewis, turned around, and headed back home to grab her purse and keys. There was only one hospital nearby, and she needed to find him.
For illustration purposes only. | Source: Midjourney
Rebecca felt her heart racing as she walked through the bustling halls of the hospital, the antiseptic smell filling her nose and making her even more anxious. She took a steadying breath as she approached the reception desk, hoping to sound calm.
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“Good morning,” she said, her voice just a bit shaky. “I’m looking for a patient who was admitted last night. His name is Charlie.”
The receptionist raised an eyebrow, looking over her glasses. “Do you have a last name, ma’am?”
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Rebecca felt herself blush. “No, sorry… I only know him as Charlie. We just… met recently,” she admitted, realizing how strange it must sound.
The receptionist gave her a slightly skeptical look. “You do know that only family or close relatives are typically allowed to visit patients, right?”
“I… I’m his girlfriend,” she blurted, surprising even herself.
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For illustration purposes only. | Source: Midjourney
The receptionist’s eyes softened as a small smile crept onto her face. “Girlfriend, huh?” She tapped a few keys on her computer, a slight twinkle in her eyes.
“You might as well learn his last name, then. You’ll need it if he’s going to be around,” she said with a wink.
“Charlie Sanders. Room 113. I’ll take you there.”
Rebecca felt her heart flip as she whispered a quick “thank you” and followed the receptionist down the hall.
For illustration purposes only. | Source: Midjourney
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Before they even reached the room, she could hear Charlie’s familiar laughter, his voice carrying through the doorway as he shared a joke with someone in the room.
The receptionist rapped gently on the wall to announce Rebecca’s arrival.
“Charlie, there’s a lady here to see you… she says she’s your girlfriend,” she added, a hint of playfulness in her voice as she glanced at Rebecca.
For illustration purposes only. | Source: Midjourney
Charlie’s eyes lit up as soon as he saw her. “Yes, yes! Rebecca, come on in. Of course, she’s here for me,” he said with a grin, gesturing for her to come closer.
Rebecca felt a rush of relief as she walked over to sit beside him.
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Charlie looked tired but cheerful, as if the hospital gown and the IV were just minor inconveniences in his day.
She glanced at him, both relieved and exasperated. “Girlfriend, huh?” Charlie teased, raising his eyebrows playfully.
For illustration purposes only. | Source: Midjourney
Rebecca gave him a mock-scowl. “I had to say something to get in here, didn’t I? And you missed our jog this morning! What happened?” she asked, a touch of concern creeping into her voice.
Charlie sighed, shifting slightly in the bed.
“Well… it’s a bit embarrassing to admit, but those jogs? Not exactly great for my health.”
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Rebecca’s face fell. “What do you mean?”
He glanced down, looking a little sheepish.
For illustration purposes only. | Source: Midjourney
“I have a heart condition. Doctor’s orders are to avoid anything too intense… like trying to keep up with you,” he admitted with a wry smile.
Her heart sank, and she shook her head in disbelief.
“Charlie, why didn’t you tell me? You shouldn’t have been running at all!”
Charlie gave a small, lopsided smile.
“Well… if I didn’t, I wouldn’t have seen you. I wouldn’t have gotten to know you.”
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For illustration purposes only. | Source: Midjourney
Rebecca felt her face soften, a mix of surprise and affection warming her heart.
“So you were willing to risk your health just to talk to me?” she asked quietly, looking him in the eye.
He nodded, his expression turning serious.
“Yes,” he said simply.
“I’ve watched you every morning, jogging at the same time, like clockwork. I’ve seen you give things to charity, help the neighbors. You’re… you’re someone special, Rebecca.”
For illustration purposes only. | Source: Midjourney
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Rebecca felt a lump form in her throat, his words striking her in a way she hadn’t expected.
She reached over and took his hand, squeezing it gently.
“Charlie,” she said, her voice soft, “you don’t need to run to spend time with me. How about dinner at my place instead?”
Charlie’s face broke into a warm smile.
For illustration purposes only. | Source: Midjourney
“Now that sounds a lot safer for my heart,” he replied, his eyes shining. “I think the doctor would definitely approve.”
Rebecca chuckled, feeling the tension in her chest ease as they shared a smile.
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“I hope so,” she murmured, looking forward to an evening that didn’t involve heart-stopping runs but instead a quiet meal with someone who, in a short time, had become surprisingly important to her.
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