• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Home
About Us Contact Us Advertising
Articles
Budgeting Debt Frugal Insurance Investing Making Money Retirement Saving Money
Tips
Money Saving Tips Trash Audit
Make Money Forums Blogs
Create a Blog Control Panel All Entries All Blogs
Tools
Calculators Prescription Drug Coupons Online Savings Accounts Test Your Knowledge Financial Directory Credit Cards

SavingAdvice.com Blog

Bridging the gap between saving money and investing

Subscribe

 

Welcome Back, !

  • Home
    • Advertising
  • Tips
    • Money Saving Tips
    • Recycle, Reuse and Repurpose
  • Make Money
  • Credit Score Guide
  • Forums
  • Blogs
    • Control Panel
  • Tools
  • Financial Basics
    • Back to Basics: Saving Money
    • Back to Basics: Beginners Guide to Retirement
    • Back to Basics: What Every Child Under 10 Should Know About Personal Finance
    • Back to Financial Basics: Investing In Stocks

Dave Says: Don’t Buy A Home When You’re Broke And In Debt

April 3, 2023 by Dave Ramsey

Dear Dave,

I’m thinking more seriously about buying a home in the next year or so. It seems like the housing market has cooled off a bit, so I am also planning to get a secured credit card to help me rebuild my credit score in the meantime. I make $60,000 a year, and I have about $15,000 in debt and $3,100 in savings. Is this a good idea and a good start toward getting my credit back on track and taking control of my finances?

Martin

Dear Martin,

In a word, no. I want you to become debt-free before you buy a home. I also want you to have an emergency fund of three to six months of expenses set aside, and have a down payment—preferably of at least 20%, so you can avoid having to pay private mortgage insurance—before buying a home.

Let me tell you a couple of things. Number one, your income is your most powerful wealth building tool. If you don’t have any payments, you have the ability to build wealth and be generous. When you have debt, all you do is send money out the door to make payments. So, being in debt is a guaranteed way to stay broke. That means getting a secured credit card is not a good idea, either. 

Also, did you know you can get a home mortgage with no credit score through a process called manual underwriting? All you have to do is make sure you have a good, long history of paying other things, like your utilities and rent, on time. Most mortgage lenders who do manual underwriting would also require that you have all your debts paid off completely and the accounts closed for at least six months.

Buying a house when you’re in debt and broke is a really bad idea, Martin. It’s the fastest way I know to turn something that should be a blessing into a financial and emotional curse. Just be patient, get out of debt and save up. Getting control of your finances is the smartest thing you can do before buying a home!

— Dave

Dave Ramsey
Dave Ramsey

Dave Ramsey is an eight-time national bestselling author, personal finance expert, and host of “The Ramsey Show.” He has appeared on “Good Morning America,” “CBS This Morning,” “Today,” Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions and is the author of numerous books including Baby Steps Millionaires: How Ordinary People Built Extraordinary Wealth–and How You Can Too.

Reader Interactions

What did you think about this article?
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 5.00 out of 5)
Loading...

Comments

    Leave a Reply Cancel reply

    Your email address will not be published. Required fields are marked *

    Primary Sidebar

    • Articles
    • Tips
    • Make Money
    • Credit Score Guide
    • Forums
    • Blogs
    • Tools
    • About
    • Contact

    Subscribe to Our Newsletter
    Thank you for Signing Up
    Please correct the marked field(s) below.
    1,true,6,Contact Email,21,false,1,First Name,21,false,1,Last Name,2
    Copyright © 2025 SavingAdvice.com. All Rights Reserved.
    • Privacy Policy