Start by defining your goals. Consider where you want to live, the features you're looking for, what you can afford, and a realistic date for having the money you'll need. Then apply your knowledge to making this key decision.

The Cost of Buying
The actual amount you'll spend to buy a home depends on the part of the country you live in and the type of home you want. While the dollar amount will vary, certain guidelines apply wherever you buy.

It's likely that you will need cash for a down payment and will get a mortgage—a long-term loan you use to buy a home. Traditionally the down payment has been between 10% and 20% of the sale price, though there are some government sponsored programs that let you put a smaller amount down. But the less you put down, the larger your mortgage payments will be and the greater the risk that you will default, or not be able to make your payments.

What a mortgage costs depends on three factors: the principal, or amount you borrow, the finance charge you pay for using the money, and the term, or length of time the mortgage lasts. You should also expect to pay an up-front interest charge to your lender, of one or more points. A point is usually 1% of the mortgage amount.