Rachel Cruze’s 10 Steps to Buying a Home You Can Actually Afford 

In my many years as a real estate investor, I’ve purchased more than a dozen homes. Over time, I’ve learned that the excitement of buying a home is only half the story, the other half is making sure you don’t get overwhelmed or, worse, end up with a property that drains your finances. 

The process of buying a home can be both thrilling and tricky, especially if it’s your first time. With rising home prices and interest rates, today’s market requires careful planning and a clear strategy to ensure you stay within your budget. 

That’s why Rachel Cruze’s approach to affordable home buying can be very useful. It’s built around practical, straightforward steps to help you make a smart purchase without stretching your finances too thin. 

In this guide, we’ll walk through Cruze’s practical steps for purchasing a home within your means. With each step, you’ll gain confidence and know what to look for, what to avoid, and how to make your money work best for you. 

Oh and if you don’t know who Rachel Cruze is, she is Dave Ramsey’s daughter. She is also a personal finance expert.

If you’ve dreamed of owning a home but want to avoid unnecessary financial stress, this approach can guide you through every essential step. 

Step 1: Make Sure You’re Financially Ready

Buying a home is one of the biggest financial commitments you’ll make, and Rachel Cruze emphasizes that readiness starts with financial stability. Before jumping in, ensure you’re free from consumer debt and have a strong emergency fund to cover unexpected costs. 

Owning a home can bring costly surprises like repairs and maintenance, which are easier to manage when you’re financially prepared. Cruze recommends a safety net of 3 to 6 months’ worth of expenses, so you won’t feel strapped if the unexpected happens. 

With this foundation in place, you’ll be more prepared to make homeownership work within your budget.

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Eliminate Debt and Build Your Savings

Being debt-free reduces your monthly obligations, allowing more room in your budget for home expenses. Cruze advises paying off all consumer debt before considering a home purchase, as debt payments eat into the income needed for a comfortable mortgage payment. 

Having an emergency fund also keeps you from relying on credit if unexpected repairs or costs come up after moving in. Together, a debt-free lifestyle and emergency savings make for a smoother home-buying journey and add financial security to your future as a homeowner.

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Step 2: Determine Your Home-Buying Budget

Knowing how much house you can afford is essential to staying within budget. Cruze recommends keeping your total monthly home expenses (mortgage, taxes, insurance, and more) under 25% of your take-home pay. 

This approach helps avoid being “house poor” and keeps your budget flexible for other goals, like retirement or emergencies. Setting a clear budget not only guides your home search but also prevents potential financial strain down the road. 

Sticking to a percentage-based limit also builds in room for ongoing costs.

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Calculate 25% of Your Monthly Income

Calculate 25% of your take-home pay to get a concrete number for what you can spend on housing each month. Include all housing-related expenses, such as property taxes, insurance, and any HOA fees, in this calculation. 

This 25% cap allows room in your budget for regular expenses, emergency savings, and even home maintenance. Keeping a firm grip on this figure keeps you from overspending and ensures your home remains an asset, not a burden.

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Step 3: Save for a Down Payment

Once you have a budget, start saving for a down payment. Cruze advises aiming for at least 20% down, if possible, to avoid PMI (private mortgage insurance), which can add significantly to your monthly expenses. 

Even if you can only reach 5 to 10%, having a solid down payment reduces your mortgage amount and, ultimately, the interest you’ll pay over time. Saving takes patience, but building a strong down payment keeps your monthly costs manageable. 

This upfront investment also gives you more equity in your home right from the start.

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Set Realistic Savings Goals

Setting specific goals for your down payment, closing costs, and moving expenses makes saving more effective. Cruze suggests calculating each cost and setting monthly savings targets to reach these goals steadily. 

Having a savings timeline that works with your budget will keep you on track without overstretching your finances. And while saving can feel like a slow process, it’s worth the security and freedom it brings when you’re finally ready to buy. 

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Step 4: Get Preapproved for a Mortgage

Once you’ve saved enough, getting preapproved for a mortgage is the next crucial step. Preapproval shows sellers that you’re a serious buyer with the funds needed to back your offer. 

Cruze emphasizes the difference between preapproval and prequalification, as preapproval is a more reliable gauge of what you can borrow. With preapproval, you can shop confidently, knowing your budget is realistic and lenders are on board. 

This step also gives you insight into the interest rates and loan options that best fit your financial situation.

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Choose the Right Mortgage Option

Cruze strongly recommends a fixed-rate, 15-year mortgage to keep costs predictable and shorten the loan term. With a fixed-rate mortgage, your interest rate remains constant, protecting you from market rate hikes. 

A 15-year term, while leading to higher monthly payments, means less interest paid over time and a quicker path to full homeownership. Avoid adjustable-rate loans, as they carry the risk of fluctuating rates, which could strain your budget unexpectedly.

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Step 5: Find a Trusted Real Estate Agent

Buying a home often requires the expertise of a skilled real estate agent. Cruze advises choosing a buyer’s agent with experience in your target area and a track record of strong communication. 

A good agent not only understands the market but also advocates on your behalf, from setting realistic expectations to negotiating a fair price. Selecting the right agent can make a substantial difference in finding a home that aligns with your budget. 

Building this partnership adds a layer of confidence to your buying experience.

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Qualities to Look For in an Agent

Look for an agent who has experience with buyers like you, can communicate clearly, and understands your local market well. An ideal agent has a proactive approach, answers questions promptly, and is willing to guide you through each step of the process. 

Interview multiple agents, if needed, to find one with a style that suits your needs. The right agent will help you make informed decisions without the stress of going it alone.

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Step 6: Go House Hunting

With your budget set and preapproval in hand, you’re ready to start searching for your ideal home. This step is exciting, but Cruze cautions against falling for appearances over value. 

Make a list of non-negotiable features, like location, layout, or neighborhood quality, to keep focused during your search. A clear list helps avoid getting sidetracked by homes that don’t truly meet your needs or budget. 

House hunting may take time, so be patient and avoid rushing into a purchase based on initial excitement.

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Prioritize Key Features and Resale Value

Focus on factors that add lasting value to your home, such as location, school districts, and floor plan, rather than cosmetic details that can be easily changed. Buying in a desirable neighborhood or close to essential amenities often leads to better resale value. 

Avoid compromising on aspects that can’t be changed, as these factors will affect your home’s appeal if you decide to sell later. Prioritizing wisely helps ensure you make a smart investment.

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Step 7: Make an Offer on a House

Once you find a home that fits your budget and needs, it’s time to make an offer. Work closely with your agent to craft a competitive yet realistic offer that aligns with current market conditions. 

Including a flexible closing date or earnest money deposit can help strengthen your offer. Be prepared for possible counteroffers and stay within your budget even if bidding competition arises. 

Keeping a clear budget and strategy helps avoid emotional overspending during negotiations.

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Understand Key Offer Components

A strong offer goes beyond just the price, it includes contingencies for inspection, appraisal, and any specific items you’d like to stay with the home. Be clear about the terms you’re willing to accept or negotiate, such as closing costs or repairs. 

Your agent will guide you through this process, ensuring that the offer protects your interests and is attractive to the seller. Staying firm on your terms is key to keeping your purchase affordable.

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Step 8: Get a Home Inspection and Appraisal

Once your offer is accepted, it’s essential to complete a home inspection and appraisal. Cruze advises always scheduling a thorough inspection, as it identifies potential issues with the home that could lead to costly repairs. 

An appraisal is also required by lenders to confirm the home’s value, ensuring you’re not overpaying. Both steps act as safeguards, allowing you to back out or negotiate if the inspection reveals unexpected problems or the appraisal falls short of the offer price.

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Preparing for Possible Inspection Outcomes

Be prepared for the inspection to reveal minor or even major issues with the home. Work with your agent to negotiate repairs or a price reduction with the seller if needed. 

If the issues are extensive, consider backing out of the deal, as your earnest money is usually refundable under these contingencies. This inspection process ensures you’re not inheriting issues that could strain your finances later.

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Step 9: Finalize Your Mortgage

After inspections and appraisals are complete, finalize your mortgage for the home. During this time, your lender reviews final financial details, and Cruze advises avoiding any major financial changes that could disrupt your approval. 

Keep your debt-to-income ratio stable by avoiding new credit applications or large purchases. This process may take a few weeks, but it’s a critical step to ensure your loan is secured smoothly. Once complete, you’ll be ready for the final closing process.

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Avoid Financial Changes Before Closing

Keep your finances stable by not taking on new debt or making large credit-based purchases until after closing. A sudden shift in your financial picture could jeopardize your loan approval and delay your closing date. 

Staying steady financially reassures lenders that you’re reliable and prepared to make timely mortgage payments. 

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Step 10: Close on Your House

The final step is closing on your new home, where you’ll sign all necessary paperwork and make the home officially yours. Expect to cover final closing costs, property taxes, and any initial insurance fees. 

Review the documents carefully, and ask questions if anything is unclear. Once you sign, you’ll receive the keys and start a new chapter as a homeowner. It’s a moment worth celebrating, knowing you followed a plan that kept your budget safe.

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Preparing for Closing Day

On closing day, bring required identification, check for final costs, and confirm that all terms in the contract are met. Reviewing the documents beforehand can ease any last-minute stress, and having your agent or attorney present can provide added clarity. 

With the final paperwork signed, the home is officially yours, marking a successful and budget-friendly purchase. 

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Make Home Buying a Success

Buying a home is one of life’s biggest steps, and with Rachel Cruze’s approach, you can make it both affordable and fulfilling. Following these steps keeps your budget in check and gives you confidence through each phase. 

While this guide provides a solid foundation, remember that you may have other factors to consider based on your unique situation, such as job stability or long-term goals. 

With patience, planning, and a focus on what you truly need, you can find a home that’s not only a place to live but also a sound investment in your future.

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AI was used for light editing, formatting, and readability. But a human (me!) wrote and edited this.