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 MIL Moved in with Us — I Found Her Showing a Strange Sign In the Window Every Night
When Rosa’s mother-in-law, Victoria, moved in to help care for her five-year-old granddaughter, life seemed to be falling into place. But late at night, Victoria’s strange hand gestures in the window revealed a secret Rosa never saw coming. A secret that would change their lives forever.
I thought having Victoria move in with us would be a win-win where Clara would get to spend more time with her grandma, and I could finally get back to work.
But as the days passed, little things about Victoria started to feel off.
An older woman | Source: Midjourney
Life hadn’t always been easy, but it had been good.
I had a loving husband, Mark, and a beautiful five-year-old daughter, Clara, who brought light into every corner of our lives.
Mark worked hard to provide for us, and although money had been tight lately, we always found a way to make things work.
Victoria, my mother-in-law, had always been part of that “good” life.
An older woman smiling | Source: Midjourney
She was kind, helpful, and never the stereotypical meddling mother-in-law you’d hear horror stories about.
From the day Mark and I got married, she welcomed me with open arms, treating me more like a daughter than an in-law.
Victoria had faced her share of heartache. She lost her husband five years ago, just a year after Mark and I got married.
I still remember how devastated she was during that time. She tried to stay strong for Mark, but you could see the sadness in her eyes.
A woman talking to her son | Source: Midjourney
Honestly, it wasn’t easy for any of us, but things started to look up when Clara was born.
Victoria had always dreamed of being a grandmother, and Clara’s arrival brought her a joy I hadn’t seen in years. She even moved in with us for a few months to help me navigate the chaos of being a first-time mom.
A newborn baby | Source: Pexels
Those months were some of the best of my life. She was supportive, loving, and full of wisdom I didn’t even know I needed.
As the years passed, Clara grew into a bright, energetic little girl who was the center of all our lives. She had a way of lighting up any room she walked into, and we adored her. But as much as I loved being a stay-at-home mom, I knew it was time for a change.
A woman in her house | Source: Midjourney
Clara had started school, and with our finances tighter than ever, I decided it was time to go back to work.
When I brought up the idea to Victoria, she surprised me with an offer I hadn’t even considered.
“I could move in again,” she said one afternoon over tea. “It’d be easier for you to get back to work if someone’s here to take care of Clara. I’d love the company, too.”
The idea immediately appealed to me. It felt like the perfect solution.
A woman in her bedroom | Source: Midjourney
Clara would have her grandmother around, I could focus on restarting my career, and Victoria wouldn’t be lonely at her place.
When I talked it over with Mark, he was fully on board.
“It’s a great idea,” he said, smiling. “Mom loves Clara, and she’ll love having a reason to be busy.”
And just like that, we made the arrangements.
A woman talking to her husband | Source: Midjourney
A few weeks later, Victoria moved back into our home, just like she had when Clara was a baby. I was excited about the change and confident it was the best move for everyone.
What I didn’t expect was how her arrival would bring a wave of strangeness into our lives. The strange, small moments made me question whether I truly knew the woman I had welcomed into my home.
At first, it was nothing. Just little things that I brushed off as quirks. But as the days turned into weeks, Victoria’s behavior started to feel odd.
A woman talking to her daughter-in-law | Source: Midjourney
One evening, I walked into Clara’s room to find Victoria kneeling by the toy chest. Her hands were moving quickly, rummaging through the pile of stuffed animals, dolls, and building blocks.
“Everything okay?” I asked, leaning against the doorframe.
“Oh, just organizing,” she said without looking up.
Her tone was casual, but something about the way she avoided my gaze didn’t sit right with me.
The next morning, Clara was inconsolable.
A little girl crying | Source: Pexels
“Where’s Bun-Bun?” she wailed, tears streaming down her cheeks.
Bun-Bun, her favorite stuffed bunny, was nowhere to be found. I turned the house upside down looking for it, checking under beds, behind cushions, and even in the washing machine.
But I couldn’t find it.
A few days later, I was walking past Victoria’s room when something caught my eye. There, perched neatly on her dresser, was Bun-Bun.
I picked it up and walked into the living room, where Victoria was sipping her tea.
A cup of tea | Source: Pexels
“I found this in your room,” I said, holding up the bunny.
“Oh, yes,” she said with a smile. “I borrowed it to fix a tear.”
I examined the bunny.
“I don’t see any tear,” I said.
“Well, it was very small.”
The explanation didn’t sit right with me, but I decided to let it go. Maybe she had good intentions.
But then there were the pictures.
Victoria started taking photos of Clara constantly. Not just cute candid moments but posed shots.
A woman using her phone | Source: Pexels
She’d ask Clara to change into different outfits, sometimes even ones she hadn’t worn in months.
“Smile, sweetie,” she’d say, clicking away on her phone.
One afternoon, I caught her sending one of the photos to someone.
“Who are you sending these to?” I asked casually.
“An old friend,” she said with a shrug.
“Who?” I pressed.
“Oh, just someone I’ve reconnected with recently,” she said, avoiding my eyes.
Her vagueness made me uneasy.
What kind of friend needed so many pictures of my daughter?
A woman standing in her room | Source: Midjourney
The strangest thing, though, was what she did every night by the window.
At exactly 9:00 p.m., without fail, Victoria would stand in front of the living room window and make a hand gesture. It looked like she was flashing a “cool” sign and moving it slightly back and forth.
At first, I thought she might be stretching, but the motion seemed too deliberate. One night, I asked her about it.
A woman looking straight ahead | Source: Midjourney
“What’s that gesture you’re doing at the window?”
She laughed. “Oh, just stretching my hand out. It gets stiff sometimes.”
But it didn’t look like stretching to me.
I told Mark about it, hoping he’d share my concern.
“You’re overthinking things,” he said, shaking his head. “Mom’s just quirky. You know that.”
I tried to let it go, but the unease gnawed at me.
Who was this “old friend”? Why was she so secretive? And what was she really doing at the window every night?
A window of a house at night | Source: Pexels
The breaking point came when I didn’t see her do the gesture one night.
Honestly, I felt relieved. I thought whatever she was doing had stopped. But then, as I passed Clara’s room on my way to bed, I heard Victoria’s voice through the door.
She was reading Clara a bedtime story. I paused to listen, smiling at the sweet moment. But then she said something that made me freeze.
“Now it’s time for that surprise I told you about,” Victoria whispered. “Let’s get dressed, and remember, Mom doesn’t need to know.”
A woman standing near her daughter’s room | Source: Midjourney
What surprise was she talking about? And why was she keeping it a secret?
Cracking the door open just enough to see, I watched as Victoria helped Clara into her coat.
I stood frozen as they quietly slipped out the back door.
This can’t be happening, I thought and immediately bolted after them.
“Victoria! Stop!” I shouted.
She jumped, startled, and Clara clung to her hand, looking confused.
“Mommy?” Clara’s small voice broke through the tension.
Before I could say another word, I noticed a man standing at the edge of the driveway, just beyond the glow of our porch light.
A man standing outside a house | Source: Midjourney
He was older, maybe in his sixties, with a calm but unreadable expression. He didn’t move or speak.
Just stood there watching us.
“What is going on here?” I demanded.
“It’s not what it looks like,” Victoria stammered. “We were just—”
“What’s happening?” Mark intervened. “And who’s that?”
He’d just come running from the house after hearing me scream. Victoria couldn’t hide her secret any longer after seeing her son.
A man standing outdoors | Source: Midjourney
“This… this is Richard,” she said as tears trickled down her cheeks. “He’s my boyfriend.”
Mark and I stared at her, stunned.
“Boyfriend?” Mark repeated, his voice filled with disbelief. “Mom, what are you talking about?”
Victoria took a deep breath as she wiped tears off her cheeks.
“I didn’t know how to tell you,” she began. “Your father’s been gone for five years, and I… I’ve been lonely. Richard and I met a while ago, but I was scared you wouldn’t understand.”
A woman talking to her son | Source: Midjourney
“He’s deaf and doesn’t speak,” she continued as her gaze landed on me. “So, we’ve been using sign language to communicate. The gesture you saw in the window? It means ‘tomorrow.’ It’s how I’d let him know when it was safe to come by.”
I blinked, trying to process her words. “Safe to come by for what?”
“For this,” she said, gesturing toward Clara. “He’s been wanting to meet you guys and Clara for months, but I wasn’t ready to tell you about him. Clara overheard me talking about him to a friend once, and she got curious. Tonight, she asked if she could meet him, and I thought…” Her voice cracked. “I thought it might be okay if I introduced them quietly.”
A woman talking to her son | Source: Midjourney
Mark ran a hand through his hair, his frustration evident.
“Mom, you couldn’t have just told us? Did you really think sneaking out in the middle of the night with Clara was the right way to handle this?”
Richard stepped forward, his hands moving in slow, deliberate gestures. Victoria translated it for us.
“He says he’s sorry,” she revealed. “He didn’t mean to cause any trouble. He just wanted to meet the people who mean the most to me. And he wanted to give Clara something special.”
A man standing outside at night | Source: Midjourney
She glanced at Richard, who nodded, encouraging her to explain.
“That’s why I took Bun-Bun,” she said, looking at me apologetically. “Richard’s been working on sewing Clara a handmade stuffed bunny to match it. He needed Bun-Bun as a reference. And the pictures I was taking? He’s been designing little outfits for the bunny that match Clara’s clothes.”
I stared at her, speechless. All the strange behavior, the missing bunny, the endless photos, the secret hand signs suddenly made sense.
A pink bunny | Source: Pexels
“Mom, you could’ve just told us,” Mark said softly. “You didn’t need to hide all of this.”
“I know,” she said, wiping away tears. “I was afraid of how you’d react. I didn’t mean to scare you.”
I crouched down to Clara’s level, brushing her hair out of her face.
“You scared me, sweetheart,” I said softly. “Next time, let’s talk about surprises before sneaking out, okay?”
She nodded, her small arms wrapping around my neck. “Okay, Mommy.”
A woman talking to her daughter | Source: Midjourney
We invited Richard inside that night, and as awkward as it was at first, it didn’t take long for Clara to warm up to him. She proudly showed him her toys while Victoria translated his gestures. He seemed kind, thoughtful, and genuinely caring.
True to Victoria’s word, Richard presented Clara with a beautiful handmade stuffed bunny a week later. It was a perfect replica of Bun-Bun, complete with matching clothes that Clara couldn’t wait to wear herself.
Over the next few weeks, Richard became a regular presence in our lives.
A man smiling | Source: Midjourney
What started as a series of unsettling mysteries ended with our family growing in an unexpected and beautiful way. Victoria learned to trust us with her truths, and we learned to give her the benefit of the doubt.
Sometimes, even the strangest signs point to the most unexpected joys.
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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