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!
A mother sold her old stroller to feed her four children, only to find it returned to her doorstep the next day with a note inside

A pregnant mother of three needs to sell her stroller to feed her three children after she was abandoned by her husband.
Anne Sargent sat on her kitchen floor and cried. It was past midnight, and it was the only time she could allow herself to show her pain — when her three children were asleep upstairs.
Anne felt the baby move and placed a tender hand on her belly. “I’m sorry,” she whispered to her unborn child. “I’m doing my best, but it’s just not good enough…”
Just two months ago, Anne had been a radially happy wife and mother, confidently expecting the birth of her fourth child, and confident in her place in the world and her husband’s love. That woman was gone.
Derek had come home one night and told her he was leaving, just like that. “But why?” asked Anne. “I don’t understand, I thought we were happy!”
“YOU were happy!” Derek cried. “YOU, not me! All you did was have babies and fuss over them, now there’s one more on the way!”
“But you WANTED children!” Anne protested. “You were happy every time I was pregnant…”
A family is built on understanding and mutual respect.
“Happy?” screamed Derek. “Happy that you gave all your love and attention to the kids? All I was to you was a paycheck! Well, that’s OVER!”
So three months after Anne announced her fourth pregnancy, Derek was gone. Anne immediately went out and found herself a part-time job at a local grocery store.
The owner would have been willing to give her a full-time job, but for that, Anne would have needed to pay a sitter for her three boys and that would have consumed most of her salary, so she carefully stretched her salary. But even with the child support check Derek sent, it just wasn’t enough.
Anne started selling some antique china she’d inherited from her grandmother and that paid for the utilities for a few months. Then she sold a silver brush-and-mirror set she’d had since she was a little girl, and that paid for groceries. Little by little, as her belly grew, Anne sold her treasures to keep her family safe and fed.
Then one day, there was nothing left to sell except bric-a-brac. Anything of greater value was gone. Anne looked at the old stroller she’d brought up from the cellar.
It had been hers when she was a baby and had been used by each of her children in turn. It was very old, probably from the sixties, but it was in mint condition.
She ran her hand over the roses painted on the side and bit back her tears. She needed it for the new baby, but she needed the money even more.
She thought about getting a good price for it down at the flea market. Vintage items were always popular… And so she took the stroller to the flea market, and one of the dealers gave her $50 for it. Not much at all, but every cent helped.
Anne walked away, sure she’d never see the stroller again, but she was wrong. Two days later, she opened the front door and saw the stroller on the porch!
There was an envelope inside and Anne opened it and read: “Please call me.” The message was followed by a phone number. Anne called the number ad a woman answered her.
“Hello?” Anne said. “Are you the person who left the stroller? How did you know who it belonged to and where I live?”
“Derek told me,” the woman on the other side said. “I’m Grace Robbs. I think we should meet.”
An hour later, Grace was sitting on Anne’s sofa sipping tea. She was a pretty woman, six or seven years younger than Anne, and she looked very unhappy. Her pale skin was blotched and her eyes were swollen as if she’d been crying.
“How do you know Derek,” Anne asked, even though in her heart she already knew the answer.
“I was his girlfriend,” Grace said.
“Was?” asked Anne. “You broke up?”
“Today, as a matter of fact,” Grace said and started crying. “I didn’t know…I didn’t know about you or the children, or the baby… I found out I was pregnant, and I didn’t know how to tell him…”
“So I went to the flea market with a friend and saw this darling stroller and I bought it. I put it in the middle of the lounge and tied balloons to it with a message: ‘Hello Dad!’”
“But he wasn’t happy like I thought he’d be. He started screaming and asking where II got the stroller and if his stupid wife had given it to me. He asked if it was a joke.”
“He told me to take it right back, that he didn’t want to know about your baby. So I told him: ‘It’s for OUR baby.’ and that’s when he went crazy.”
“He accused me of wanting to trap him and said he already had three brats with you and one more on the way, and he didn’t want my baby. He told me to get out and come to you.”
“He said: ‘Might as well have all the breeding cows under the same roof.’ I’m so sorry, I didn’t know about you, I guess I didn’t know him at all!”
Anne got up and put her arm around the crying girl. “It’s okay. It’s going to be okay, you’ll see.”
“He’s kicked me out,” Grace said quietly. “I have no family here and nowhere to go. I have a job, but with the rents in this city, I can’t afford to live alone, and who is going to want a pregnant roommate?”
“I will!” Anne said firmly. “I need a tenant because what I earn isn’t enough, and I can’t work full-time because I can’t afford a babysitter for after school.”
“But…” Grace’s face lit up. “I work online! I can take care of the kids after school. I love kids!”
“So I can take a full-time job?” asked Anne, delighted. “The owner of the grocery store wants me to manage it for him. With your help, I can! And you don’t have to worry about stuff for the baby. After three kids I have enough for an army.”
Grace smiled through her tears. “And we have the stroller too…” she pointed out. “Are you sure? It’s Derek’s baby…”
“No,” Anne shook her head. “It’s YOUR baby, and my children’s sibling, that is all that matters.”
The two women settled into a new life together, and when Anne’s baby was born, Grace was there. When it was Grace’s turn four months later, Anne held her hand. They became a real family and raised their five children together.
As for Derek, he had several failed relationships and eventually came knocking on Anne’s door. He was shocked when he saw Grace there and asked to speak to Anne. “What do you want, Derek?” Anne asked.
“I miss you, babe…” Derek said.
Anne stared at him for a long moment then said, “Sorry, so not interested!” And she closed the door in his face.
What can we learn from this story?
If we work together, we can overcome any problem. Anne and Grace couldn’t survive alone, but together they were an unbeatable team.
A family is built on understanding and mutual respect. Anne and Grace forged a family out of their friendship and mutual support.
Share this story with your friends. It might brighten their day and inspire them.
Leave a Reply